Despite moderate collectively agreed nominal pay increases across the European Union in 2009, the dramatic drop in the annual inflation resulted in significant pay increases, according to new data from Eurofound’s European Industrial Relations Observatory (EIRO). The annual update on pay developments in Europe found that differences in pay and price trends between the former EU15 countries and the 12 new EU Member States remained large, with average pay rises in the new Member States 1.9 times higher than in the former EU15 Member States.

For the EU as a whole, despite the general decline in nominal pay increases in 2009, continuing a trend of wage moderation since 2008, the steep fall in inflation resulted in real pay increases in all countries bar Malta. While the inflation rate fell sharply, from 3,7% in 2008 to 1% in 2009, average real pay rose by 2,9%, compared to 0,5% in 2008.

The economic downturn affected the whole of Europe in 2009, though the depth, length and timing of its effects varied considerably. It was undoubtedly a factor in the drop in collectively agreed nominal pay levels in both 2008 and 2009. The (unweighted) average of collectively agreed nominal pay increases fell from 5,0% in 2008 to 4,2% in 2009. In 2008, the increases ranged from 15,8% in Romania to 1,8% in Malta, while in 2009 the range was between 17,6% in Romania and 1,8% in Malta. Increases in collectively agreed nominal pay in the former EU15 countries were at considerably lower levels than in the EU as a whole, with an average increase of 3,8% in 2008 and 3,1% in 2009. In the ten new Member States the average rate of nominal increase was 7,1% in 2008 and 5,9% in 2009.

The report also found that out of the 28 countries covered, 20 have a national minimum wage, either by law or by national intersectoral agreements. The overall average rate of increase in the EU fell sharply from 9,8% in 2008 to 4,7% in 2009, falling in 15 of the 20 countries. Across the EU, the average increase in minimum wages was higher than the average increase in collectively agreed wages in both 2008 and 2009. The report also provides a comparison of increases in adult and youth minimum wage rates across the EU, in their local currencies, between 2008 and 2009. In terms of actual rates, Luxembourg has the highest minimum monthly wage at EUR 1,609, followed by Belgium at EUR 1,387 and the Netherlands at EUR 1,356. At the other end of the scale, Bulgaria is at the bottom with EUR 112 per month, followed by Romania at EUR 146 and Latvia at EUR 227.

The report also found that the gender pay gap averaged 18% across the EU27.