Real Wage Loss in Austria This Year Significantly Above EU Average
Austria will have to reckon with heavy losses in real wages in the future. This was the result of a recently published analysis, which predicted that Austria would occupy one of the weakest positions in the EU. Read on if you want to know how much money will be left over from your income in the future.
Workers in Austria will probably suffer a strong loss of real wages this year. / Picture: © Wikimedia Commons / Usien [Public Domain]
The European economy is sliding from one crisis to another. In 2021, the outbreak of the Covid-19 pandemic caused a historic economic slump. Just as the situation seemed to be easing and the economy was beginning to recover, with even strong growth forecasts, the bad news came - Russia's war of aggression in Ukraine.
The 24th of February 2022 is a key date that should suddenly darken the economic outlook. Consequently, the war also determines the framework for European wage policy, as shock inflation caused by energy prices reduces the purchasing power of wages and exacerbates poverty among lower wage groups.
In addition to the unpredictable course of the war, tighter sanctions by the European Union (EU) and the possibility that Russia will stop providing gas, further economic development is almost impossible to predict, even for the bargaining parties. However, the pandemic is not over. Lockdowns are affecting global supply chains and exacerbating the shortages of many goods.
Now the German Economic and Social Research Institute (WSI), which is close to the trade unions, has published a report that looks at tariff developments in the EU and analyses selected countries.
Poor prospects for Austria
The WSI report also analyses Austria and does not come to a particularly exhilarating conclusion. Workers in Austria will probably suffer a strong loss of real wages this year. If they are paid according to the collective agreement, there will be an average drop in income of 4.2 per cent in 2022, taking inflation into account. In the previous year, there was still a plus of 0.7 percent.
With these figures, Austria is one of the worst countries in the EU, which records an average real wage loss of 2.9%. Compared to countries like Hungary, for example, which have to accept a minus of 0.3%, Austria is much worse off with 4.2%.
Within the EU-27, Austria will record the second-highest decline in real income, according to the WSI data. Only the Czech Republic, with a proud 8.3% real wage loss, is behind Austria.
Nominal wages in Austria are expected to rise by 1.5% this year. This is clearly below the EU average of 3.7%. Nominal wages are the pure wage increases, without taking into account the strong inflation.
While Austria lags behind in wage growth, it has positive news to report on unemployment. The unemployment rate in Austria is seen at 5 per cent this year, in the EU at 6.7 per cent, while in Germany it is only 3.3 per cent.