Average European wages increased significantly between 2005 and 2006, Eurofound’s European Industrial Relations Observatory (EIRO) reveals in its annual update of pay trends, Pay developments – 2006. However, considerable differences remain between the former EU15 and the 12 new Member States, both in terms of trends and the level of pay increases.



The average collectively agreed nominal increases across the EU rose from 4.9% in 2005 to 5.6% in 2006. When adjusted for inflation, the real wage increase across the EU27 rose from 1.9% in 2005 to 2.7% in 2006. In the EU15, the average nominal increase had risen from 2.8% in 2005 to 2.9% in 2006, while the rate of real increase rose from 0.6% in 2005 to 0.8% in 2006. However, the average increase in the 12 new Member States was higher, rising from 7.5% in 2005 to 9.1% in 2006, with the rate of real increase climbing from 3.5% to 5.2%.

New Member States top wage increases

‘The overall figures for the EU27 indicate a continued moderation in pay increases. However, the findings for the twelve new Member States tell a different story,’ said Jorma Karppinen, Eurofound’s Director, commenting on the report’s findings. ‘These findings are good news for workers in the twelve new Member States: it seems that the pay gap between them and their fellow citizens in the EU15 is closing rapidly.’

According to the findings, the overall picture in the EU27 is of a continuing moderation in real and nominal pay increases in the former EU15, but of an upward trend in the twelve new Member States. In these new Member States, the average real pay increase was 6.5 times higher than in the former EU15.

Clear trends hard to spot

In the new Member States, real pay increases in 2006 varied from -1.4% in Hungary to 16% in Latvia. For the former EU15, the range of real pay increases in 2006 was between -0.1% in Germany and 2.6% in Greece. Over a five-year span from 2000–2006, however, only a few countries display a clear trend in real pay increases. Most fluctuate from year to year, although in many of the new Member States pay increases dipped until 2004, and then began to rise (after these countries joined the EU). There was also a fairly consistent downward trend in Bulgaria, Germany, Hungary and Slovenia.

Providing a snapshot of wage developments in Europe

This annual update from EIRO aims to provide a broad, general indication of trends in pay increases across the EU Member States and Norway. It also looks at collectively agreed pay increases in metalworking, banking and local government, increases in minimum wages, increases in average earnings and the gender pay gap.