European real wages remain below 2021 levels despite recent improvements. The Indeed Wage Tracker shows most major economies are close to full recovery, except Italy and Spain.
The Netherlands leads with a real wage index of 99.7, followed by the UK at 99.5. France and Germany trail at 98.1 and 99.1 respectively. Italy's index sits at just 89.9, indicating significant wage erosion.
Pawel Adrjan, Director of Economic Research at Indeed, says the war in Ukraine triggered a sharp rise in energy and food prices that pushed inflation above 10% in 2022. That surge created lasting gaps in real wage growth across Europe.
Slow wage adjustments and central bank policy responses, including rising interest rates, have prolonged the recovery. These actions cooled labor markets and weakened union influence.
Italy stands out as an exception-job posting levels are high but wage growth remains stagnant. Lower-paid workers are most affected due to infrequent wage revisions tied to minimum wage floors.
The conflict in Iran raises concerns about further delays in wage recovery. High energy prices could act as another inflationary shock, pushing recovery timelines back to 2027-2028 if disruptions persist through summer refill seasons.