Employees in Europe face real wage losses of 2,9 percent due to inflation

Employees in Europe face real wage losses of 2,9 percent due to inflation

As prices for everything from food and energy to clothes and rent go through the roof, workers have noticeably less money in their pockets each month. A new study has now estimated exactly how much worse off employees in Germany and the rest of Europe are likely to be. 

Real wages could fall by 2,9 percent in 2022, study concludes

Amid the currently high inflation rate, consumers’ purchasing power is being rapidly diminished. A new study by the union-affiliated Institute for Economic and Social Sciences (WSI) at the Hans Böckler Foundation has concluded that employees in Europe should prepare for real wage losses as a result.

The study noted that gross wages in Germany rose by 3,4 percent last year and were therefore well below the general price increase. It's likely that this trend will continue this year, according to the WSI. Wages across the EU are expected to grow by 3,7 percent, while, at the beginning of July, the European Commission forecast that inflation for 2022 would average 7,6 percent.

Overall, the study's authors concluded that real wages in Germany and the rest of the EU could fall by 2,9 percent in 2022: “A process that is unique in the past decades,” they wrote.

Wage increases in 2022 dwarfed by price rises in EU

With minimum wages rising three times in 2022 - first in January, then in July, and then again in October, there had been some speculation that the country would get into a so-called “wage-price spiral” that fuels inflation, but the study’s authors said this didn’t seem to be materialising. “In view of the continued restrained development of nominal wages, there are no signs of overheating wage dynamics, which in turn could increase inflation,” they wrote. 

The study authors concluded by saying that, at a time when certain industries in Germany are reporting strong profits and high payouts to shareholders, significant wage increases could be justified in many sectors.



Abi Carter

Managing Editor at IamExpat Media. Abi studied German and History at the University of Manchester and has since lived in Berlin, Hamburg and Utrecht, working since 2017 as a writer,...

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