Turkey topped the table when it came to real wage growth divergence across Europe in 2024. The country has seen incredible real wage growth of 15.5% in real, after tax terms. That’s an incredible success considering it did this with a terrible inflation rate of 58.3%. Romania wasn’t far behind with a 14.3% increase in real wages, while Bulgaria, Malta, and Hungary all demonstrated large percentage point increases. Conversely, Finland was the only country to experience a nominal decline in average wages, reflecting a broader trend of stagnation in certain European economies.
Leading the Growth: Turkey and Romania
In real terms, Turkeys 15.5% real wage growth will be the highest in all of Europe in 2024. This spike shows that despite the ongoing fight against high inflation, workers still enjoyed one of the largest boosts to their real wages in a generation. The Turkish economy is under enormous strain from high inflation. Despite these difficulties, the increase in wages is a sign that employers are fiercely competing to keep talent under duress.
Romania took second place with a real wage increase of 14.3%. This recent growth further reflects our country’s continued economic recovery and emerging robust labor market. To become successful, the Romanian government has implemented various policies to promote employment and productivity. In turn, employees are beginning to reap the benefits with increasing wages.
Bulgaria, Malta and Hungary follow closely behind, with real wage increases of 9.2%, 9% and 8.9%, respectively. These figures reflect a regional trend of increasing wages as countries seek to enhance living standards and attract skilled labor. The economic policies used by these countries have played a huge role in their respective labor market progress.
Countries with Moderate Growth
Most countries saw moderate real wage growth, a sign of both increasing economic stability and economic inequality. Latvia had the highest increase in real wages at 8.4%, but Poland and Lithuania were close behind, with gains of 7.8% and 7.2%, respectively. These large increases are a sign that economic conditions are improving. There’s still much more replicable growth and potential development in these labor markets.
Many different elements propel the optimistic trajectories in these countries. Increased foreign investment and improved labor laws that strengthen workers’ rights in all countries involved are integral pieces. As these countries grow into their own economic destinies, their commitment to not repeatedly undercut wages to attract investment is as important as ever.
Declines in Real Wages
Real wage growth was uneven across countries, with half of all countries reporting wage growth that failed to keep pace with inflation. In 2024, Finland experienced the sole decrease in nominal average wage. The cut in wages of €14 would translate into an insignificant real wage loss of just about 0.9%. Likewise, Iceland saw a real wage drop of -0.7%, illustrating the economic crisis that has consequentially lowered compensation for workers.
Belgium registers the deepest real wage drop, at -1%. It’s not a positive trend and it points to deeper problems in its labor market or overall economic environment that should concern policymakers. Luxembourg figured in the negative as a surprise at -0.4%, emphasizing that even in the wealthiest countries of Europe, wage stagnation cannot be escaped.
In terrible shape France ended up at the bottom of the performance table, with only 0.7% real wage growth. Yet it hides many of the difficulties still plaguing the French economy. For far too many of our workers, the cost of living has increased much quicker than their current pay growth.
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