Real wages are likely to fall nearly four percent this year — that would be the biggest loss of purchasing power for workers since the 1960s. Even during the financial crisis, real income, ie income adjusted for inflation, fell by only about one percent.
According to the Momentum Institute, real income fell only once between 1960 and 1990, citing data from the EU database Ameco. Since then, including 2022, there have been nine years of real wage losses. In addition, annual real wage increases from the 1960s to the early 1990s often exceeded 1.5 percent — an increase not seen since the late 1990s.
In the 1970s, when inflation was last high in Austria, wage agreements were still above inflation. In 2022, “rapidly rising inflation”, which is well above the wage agreements of the previous year, will lead to a sharp fall in real wages.
“Loss of purchasing power for employees”
“Without a salary increase, there is a risk of an equally obvious, if not greater, loss of purchasing power for employees next year,” writes Jakob Sturn, an economist at the Momentum Institute. From Sturn’s point of view, there is no “evidence of a price-wage spiral” as the basis for the collective bargaining is only the average management of the previous year. At 6.3 percent, that is well below the current inflation rate of 9.3 percent.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
