Real Wage Surge in Europe for the First Time Since '21: A Breakdown
European salary growth to bring about genuine wage rise since 2021, projected for 2024. - Europe's tariff increases in 2024 result in workers experiencing increased wages compared to previous years, marking the first instance since 2021.
For the first time since 2021, Europe witnesses substantial increases in purchasing power, particularly in Austria (5.4%), Portugal (4.5%), and Slovakia (3.8%). The inflation-adjusted rise in Germany stands at a healthy 2.8%, marginally above the average.
However, it's crucial to note that in most countries with available data, wage increases after inflation are still below the 2020 levels. Wage-earners in the Czech Republic (11.4%), Italy (9.1%), and Spain (5.6%) suffered significant real wage losses. The difference in Germany is 4.7%, according to the WSI wage archive.
Recent research reveals a drastic increase in the volume of strikes in the Eurozone over the past two years. The labor union-affiliated Hans-Böckler Foundation attributes these successes to the intense negotiations between unions and employers. This trend has even led to an increase in labor disputes in countries where such incidents are usually scarce.
For Germany, the WSI researchers calculate a strike rate of 21 lost days per year and 1000 employees. This places Germany "in the middle of the European field" together with the Netherlands. More strikes were recorded in 2024 in Belgium (107 lost days), France (102 lost days), and Finland (93 days).
The Ground Reality: A Deeper Look
- Inflation Context: Germany's recent inflation rate has been relatively moderate. A 2.1% inflation rate was recorded in April and May 2025, slightly lower than earlier months. While inflation has declined from a high of 8.7% in 2022 to around 2.1% in 2025, it's expected to further decrease to 1.9% in 2026[1][2][5].
- Wage Growth: While detailed real wage figures are scant from the provided sources, it's notable that wage growth in Germany has been robust given the declining inflation. This suggests that nominal wage increases have surpassed inflation to some extent, driving real wage growth. However, economic stagnation and a slight GDP contraction in recent years (2023 and 2024) have imposed constraints on wage increases and purchasing power[4][5].
Comparison with Other European Countries
When compared to several other European countries, Germany's inflation rate and wage growth have been comparatively mild. Some other Eurozone countries have grappled with higher inflation rates, which can erode real wages if nominal wages don't keep pace.
Germany's economic stagnation and slow recovery from energy shocks have prompted cautious wage increases, unlike countries with stronger GDP growth that can afford larger wage hikes. Overall, Germany's real wages have likely increased modestly after adjusting for inflation, while certain other European countries may be experiencing either wage stagnation or real wage erosion due to stiffer inflation pressures.
The Impact on Labor Disputes in the Eurozone
- The moderate real wage increases in Germany have most likely contributed to fewer large-scale labor disputes compared to countries where inflation has outpaced wage growth significantly, sparking demands for higher wages.
- Across the Eurozone, labor disputes have been affected by inflation dynamics and real wage changes. In areas where real wages are compressed, labor unrest tends to escalate. Germany's more moderate inflation and wage growth environment might have helped keep labor disputes under control.
- The economic stagnation and uncertainty in Germany could still fuel labor negotiations focused on safeguarding purchasing power, but the overall impact has been less intense than in countries with higher inflation and weaker real wage growth[1][2][4][5].
- Given the robust wage growth in Germany despite declining inflation, it's evident that community policy discussions might focus on equitable distribution of the economic benefits among employees, ensuring fair employment policies in various sectors.
- As businesses navigate the economic landscape, they may need to review and possiblyrevise their employment policies to align with emerging trends, such as the recent increase in labor disputes across the Eurozone, and take into account the impact of inflation and wage growth on their financial stability.
