COVID-19, Russia’s invasion of Ukraine, soaring energy prices, record inflation, and other factors have all put pressure on wages across Europe. Rising living costs have hit millions of European households hard. <\/p>\n
Real wages, which take inflation into account, fell in a third of the European countries analysed over the five years to early 2026. <\/p>\n
So, which countries saw the biggest real wage declines between the first quarters of 2021 and 2026? And where did real wages rise most? Why did some countries emerge as outliers in real wage growth while the euro area overall saw a decline? <\/p>\n
According to the OECD Employment Outlook 2026, which covers 27 European countries but not all EU members, real wages declined in nine countries cumulatively between the first quarters of 2021 and 2026. <\/p>\n
Impact of the 2022\u20132023 cost-of-living crisis <\/p>\n
“Real wages were still affected by the cost-of-living crisis of 2022-2023 even in Q1 2026,” Andrea Bassanini, editor of the OECD Employment Outlook, told Euronews Business. <\/p>\n
“As sectoral collective agreement renewals do not take place every year and are usually staggered, negotiated wages have taken much time to recover, and did not do it completely.” <\/p>\n
He also pointed out that statutory minimum wages had largely kept pace with prices. <\/p>\n
Related <\/p>\n
Real wages fell by more than 6% in Italy <\/p>\n
Italy saw the largest decline, with real wages falling by 6.1%. Ronald Janssen, former chief economist at the European Trade Union Confederation (ETUC) and the Trade Union Advisory Committee (TUAC), stated that employers systematically delaying new agreements and the weakening bargaining position of trade unions contributed to the real wage decline in Italy. <\/p>\n
Michele Bavaro, an economist at Italy’s Scuola Normale Superiore, said Italy’s historically long delays in renewing contracts slowed the recovery in nominal wages following a rise in inflation. <\/p>\n
Richard Grieveson and Meryem G\u00f6kten from the Vienna Institute for International Economic Studies (wiiw) also pointed to weak productivity, subdued economic growth, and relatively slow nominal wage adjustment in Italy. <\/p>\n
Czechia and Sweden recorded declines of 5.8% and 4.8%, respectively. Real wages fell by 2.1% in Denmark and 2% in Spain. Across the eurozone, they declined by 1.8% over this period. <\/p>\n
Slovakia, Finland, Ireland, and Switzerland also saw slight declines of between 0.7% and 1.4%. <\/p>\n
Story continues <\/p>\n
Acceleration of inflation and job insecurity concerns <\/p>\n
Ronald Janssen pointed to the acceleration of inflation in 2021-2022 in the eurozone. <\/p>\n
“While subsequent collective bargaining rounds in the years following the great inflation outbreak tried to restore the purchasing power of wages<\/a>, workers and trade unions saw their bargaining power hampered by the job insecurity concerns resulting from several years of stagnating economic growth, fears of de-industrialisation because of Chinese competition and a US-led tariff war undermining access to a major European export market,” he told Euronews Business. <\/p>\n In Belgium, real wages remained unchanged, while France and Estonia recorded marginal increases of just 0.1%. <\/p>\n Turkey: A significant outlier <\/p>\n Turkey stands out as the most significant outlier, recording the highest real wage growth at 78.6% despite an inflation rate of 32% in mid-2026. <\/p>\n “Turkey’s 79% real wage increase is arithmetically correct but overstates the increase in living standards,” Grieveson and G\u00f6kten told Euronews Business. <\/p>\n “Real wages started from a low level in 2021, still depressed after the 2018 currency crisis, so part of the rise was actually recovery.” <\/p>\n They also stated that the main driver of the sharp increase in 2022-2023 was the double minimum wage hikes, largely election-driven. <\/p>\n “After the 2023 elections the adjustment returned to once a year and has since stayed below inflation,” Grieveson and G\u00f6kten added. <\/p>\n