In 2022, inflation in the European Union (EU) reached a level unprecedented in four decades. Between 1997 and the end of 2021, the highest annual inflation recorded in the EU was just 4.4%. It happened in July 2008.
On the other hand, in October 2022, inflation reached 11.5%. After this peak, inflation began to decline, but in June 2023 it was still at 6.4%.
According to the Organization for Economic Co-operation and Development (OECD) report “Employment Outlook 2023: Artificial Intelligence and the Labor Market”, the Covid-19 crisis was followed by a significant increase in prices.
Prices began to rise as early as 2021, following the rapid recovery from the pandemic and the associated disruptions in supply chains. A new wave of inflation was caused by the rise in energy prices, which was caused by Russia’s aggression against Ukraine in 2022.
Households are struggling with the rising cost of living, and almost all EU member states have increased nominal hourly wages over the past year, but this increase is not keeping pace with inflation.
During the year since the first quarter of 2023, the real wage has decreased in 22 out of 24 European countries.
From the first quarter of 2022 to the first quarter of 2023, the real hourly wage increased only in Belgium and the Netherlands, where it increased by 2.9 and 0.4%, respectively.
In other European countries, the real wage has decreased, starting with 0.8% in Luxembourg and ending with 15.6% in Hungary.
In several EU countries, the drop was significant, as the decrease in the real hourly wage rate exceeded 5%. In this regard, Hungary is followed by Latvia, where the real salary has decreased by 13.4%. A sharp drop in real wages was also recorded in the Czech Republic (-10.4%) and Sweden (-8.4%).
Meanwhile, in Lithuania and Estonia, the real salary fell by 5.8 and 4.9%, respectively.
A less rapid decline in real wages was registered in France (-1.8%), Great Britain (-2.9%) and Germany (-3.3%).
Nominal hourly wages have increased in all 24 countries on the list, with growth rates ranging from 0.6% in Finland to 13.6% in Lithuania.
In Hungary, the nominal hourly wage increased by 9.8% during the year, in Great Britain – by 6.1%, and in France – by 4.2%.
Meanwhile, nominal salary growth was registered in Latvia by 6.2%, and in Estonia – by 11.4%.
The annual inflation rate between Q1 2022 and Q1 2023 ranged from 3.2% in Switzerland to 25.4% in Hungary. In this area too, Latvia ranks right after Hungary, with annual inflation reaching 19.6%.
At the same time, the annual inflation in Estonia and Lithuania was at the level of 17.1 and 18.4%, respectively.
In the EU as a whole, the average inflation rate during this period was 9.4%.
2023-08-22 16:12:54
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