Real Wages are Growing, but Nearly Half of OECD Countries Still Earn Less Now than Pre-Pandemic

While the weakening inflation in mid-2024 has led to global growth in real wages, many countries, including the United States and the Eurozone, are still below their 2019 levels. According to data presented by Stocklytics.com, despite the recent growth, nearly half of OECD countries earn less now than before the pandemic.

Sweden, Czechia, and Italy are the Worst Hit Countries; the United States and Most Major European Economies are Also in Red

The Russian invasion of Ukraine in early 2022 had a significant impact on global wages. Most workers saw their real wages drop, with inflation running high in many countries. This, coupled with rising life costs, led to a drop in real purchasing power.

Although inflation started weakening in mid-2024, over half of OECD countries still earn less than before the pandemic. According to the latest OECD Employment Outlook, people in the United States, Canada, Japan, Australia, and many European countries now have less money at their disposal than roughly five years ago, with significant differences between them.

For instance, Sweden, Czechia, and Italy were hardest hit by this negative trend. Sweden, a country already known for relatively low real wages compared to its pricy standard of living, saw the most significant wage drop, falling by 7.5% since 2019. Workers in Czechia suffered the same wage decline, while Italy stands in third place with a 6.9% drop.

Statistics show New Zealand and Finland follow closely with a 6.2% and 5.9% wage drop compared to pre-pandemic. Australia, Denmark, Spain, and Canada are also in red, with their wages falling between 2.4% and 4.8% in this period. Switzerland, Germany, and Japan saw a smaller 2% decrease, 0.5% to 1% more than Estonia, Belgium, and Norway. The United States fared better than others, as real wages were just 0.8% lower in Q1 of 2024 than in Q4 of 2019.

Lithuania, Hungary, and Poland Stand Out with the Biggest Wage Growth Since 2019

While many OECD countries grapple with the imbalance between rising life costs and wages lower than pre-pandemic, there are examples of resilience. Lithuania, in particular, stands out. The survey reveals that real wages in this country surged by 16.5% compared to pre-COVID-19, marking the largest increase in the OECD group.

Hungary, Poland, Slovenia, and Latvia also experienced significant increases, with their wages rising by 13.5%, 9.5%, 9.3%, and 9.2% in the past five years, respectively. Statistics show Portugal, Mexico, and Costa Rica saw smaller gains, but their wages still went up by an average of 5%. The United Kingdom is the only major European economy whose wages increased in this period, rising by 3.1% compared to pre-pandemic.