Image: Michael Bihlmayer/CHROMORANGE/picture alliance
Overall, eurozone residents have lost 1.8% of their purchasing power over the past five years, according to a new OECD report analyzed by Euronews Business.
Italy was hit the hardest. Real wages there fell by 6.1% over the past five years—the worst performance among all countries in the study. Next are the Czech Republic (-5.8%), Sweden (-4.8%), Denmark (-2%), and Spain (-2%). A slight decline was also recorded in Finland, Slovakia, Ireland, and Switzerland.
There is one reason for this: wages have not kept pace with inflation.
“Collective bargaining agreements are not renegotiated every year, so wage increases have been too slow and have failed to fully offset the surge in prices,” Andrea Bassanini, editor of the OECD report, explained to Euronews Business.
This problem was particularly evident in Italy. Experts attribute the situation to protracted negotiations between employers and unions, weak economic growth, and low labor productivity. As a result, household incomes recovered more slowly than in most other European countries.
But there were exceptions. Turkey emerged as the clear leader, with real wages rising by 78.6% all at once. However, economists caution against interpreting this figure as evidence of a sharp rise in prosperity. According to them, the country was merely recovering from the decline following the 2018 currency crisis, and the growth was driven primarily by multiple increases in the minimum wage.
Among EU countries, Hungary took first place with a 29.8% increase in real wages. In Poland, the figure rose by 16.5%. Looking only at eurozone countries, Lithuania led the way (+14.8%). It was followed by Latvia (+7.4%), Slovenia (+6.6%), Portugal (+5.6%), Greece (+4.7%), and Luxembourg (+4.1%).
Among Europe’s largest economies, the United Kingdom fared better than the rest, with real wages rising by 3.6%. In Germany, growth was 0.9%, and in France, just 0.1%, while Italy and Spain have yet to restore the purchasing power of wages to pre-pandemic levels.
The OECD attributes the differences between countries in part to minimum wage policies. In Germany and the United Kingdom, the minimum wage grew faster than inflation, whereas in France and Spain, it generally only kept pace with rising prices.
The study’s authors also note that the calculations cover the period up to the first quarter of 2026 and do not account for the subsequent spike in energy prices following the escalation of the conflict surrounding Iran.
