Wage StagNations

The last few years have seen international crises such as climate change, the Covid pandemic and the war in Ukraine all putting pressure on global supply lines and economies. This has, in turn, led to soaring inflation in many parts of the world, leaving people struggling to keep up with the costs and struggling to make ends meet. This set of circumstances has been referred to by many in the media as the cost of living crisis.

During this time of economic hardship, many businesses are looking for ways to reduce their outgoings and keep on top of rising bills. Simply switching suppliers could save a company thousands of pounds a year, which can then be invested into other parts of the business or used to provide a safety net in troubled economic times. That’s why companies need to compare business energy suppliers to get the best business electricity rates.

However, rising inflation has left many employees in financial hardship, which has led to many companies raising wages to support their workforce. Sadly, not all companies can raise wages to keep up with inflation as their finances have come under increased pressure. With this in mind, we wanted to compare wage increases in different countries to inflation rates, revealing where in the world people’s earnings have stagnated the most.

1. Greece – Average wage 10-year increase: 1.5%

Greece has the lowest wage increase over the last 10 years, with the national average wage rising by just 1.5%. In 2022, the average Greek annual wage was €24,709 (£21,078), but back in 2012, it stood at €24,339 (£19,736 at the time), meaning that average wages have only risen by €370 over the last decade.

Much of the Greek economy depends on tourism, and recent years have not been kind to that sector. The COVID pandemic halted international travel, decimating the countries’ tourism and leisure industries. Combine this with the harsh effects of global warming, such as increased wildfires and flooding, and it’s no surprise that such a tourism-focused economy has struggled to see wages rise.

2. Switzerland – Average wage 10-year increase: 7.1%

Switzerland is the OECD country with the second lowest 10-year increase in average wages at just 7.1%. While one of the world’s wealthiest nations per capita, this rich Alpine country has seen considerable wage stagnation in recent years. The average wage, which in 2022 stood at 69,702 Swiss Francs (£59,223), was only 4,631 Francs higher than 10 years prior.

One of Europe’s historic financial centres, the Swiss economy has traditionally had banking at its heart. At the same time, recent technological developments have made the country a driving force in fintech. Prices in the country are very high, which is made up for with equally inflated wages. However, as inflation continues to creep up, wages have not managed to keep pace with inflation, resulting in less disposable income and a higher cost of living.

3. Israel – Average wage 10-year increase: 7.5%

Israel has seen the third-lowest increase in average wages over the last 10 years, at 7.5%. In 2012, the average wage in Israel was 137,998 Shekels (equal to £22,589 at the time), and by 2022 had risen to 148,389 Shekels (£35,826), for an increase of 10,391 Shekels.

While Israel benefits from a modern economy with a robust tech sector and a reputable higher education system, this does not seem to translate into higher wages for the average worker. However, despite the wealth generated by these, Israel’s strong economy fails to trickle down to wider society. Yet, the country is considerably more affluent, and its people are more well-off than most other countries in the region.

1. Hungary – Average Wage 10-Year Change: 100.7%

Wages in Hungary have increased more than any other OECD country in the past 10 years, going up by 100.7%. This puts a lot more spending power in Hungarian pockets, raising the standard of living and encouraging more consumer spending, which should help to generate further economic growth.

2. Latvia – Average Wage 10-Year Change: 87.6%

Latvia has seen average wages rise by an impressive 87.6% over the past 10 years, increasing by over €15,000 for a 2022 figure of €32,467 (£27,696). While one of the poorer member countries of the OECD, the Latvian economy has grown significantly over the past decade, cementing itself as an important part of the wider European economy.

3. Lithuania – Average Wage 10-Year Change: 82.4%

Lithuania has seen the third-largest increase in average wages in the 10 years to 2022, with wages rising by 82.4%. This represents an increase of almost €19,000, bringing average wages in 2022 up to €41,829 (£35,598). Lithuania has the largest economy of the Baltic states and, like neighbouring Latvia, has benefitted from joining the EU within the last decade, opening up a plethora of new trade and business opportunities.

1. Mexico – CPI 10-year increase: 56.9%

According to the Consumer Price Index, over the last 10 years, the country with the highest inflation is Mexico, with a CPI increase of 56.9%. This means that prices for everyday goods in Mexico have risen dramatically over the past decade, which will undoubtedly put a squeeze on the finances of the average Mexican consumer.

2. Hungary – CPI 10-year increase: 50.2%

Hungary has the next-highest CPI increase at 50.2% over the past 10 years, the highest increase in Europe. Historically, Hungary has been known for its affordability and very low relative prices, making it a popular destination for travellers looking to make the most of their travel budget.

3. Lithuania – CPI 10-year increase: 48.7%

Lithuania has the third-highest CPI increase, where prices have risen by 48.7% from 10 years to 2022. The Baltic states have traditionally been one of the more affordable locations in Europe. However, Lithuania’s proximity to Russia has meant that the supply chain disruptions caused by the war in Ukraine have had a particularly potent impact on local prices, pushing up the cost of everyday goods, services and energy.

1. Switzerland – CPI 10-year increase: 3.6%

Switzerland has seen the lowest CPI inflation rate over the last decade at just 3.6%. While prices in the country are higher than most, they have barely increased at all in recent years, providing citizens with a stable and low-stress economy.

2. Greece – CPI 10-year increase: 7.4%

Prices in Greece have risen by the second-lowest amount in the OECD, increasing by 7.4% between 2012 and 2022. This low inflation rate has helped the Greek people to weather the storm of the Greek government debt crisis, which first erupted in late 2009 and caused widespread economic hardship for many years.

3. Israel – CPI 10-year increase: 9.7%

Israel has the third lowest CPI inflation rate over the past decade, at 9.7%. While almost reaching 10%, the country has managed to keep prices affordable for most workers, making it an attractive place for skilled migrants to build a career.

1. United States – Wage/CPI Index 10-year change: -15.1

The United States has seen wages fall the furthest behind inflation in the past 10 years. Inflation, measured using changes to the Consumer Price Index, stood at 29.1% from 2012 to 2022, meaning that prices rose by almost a third. In the same period, average wages only rose by 14.04%, resulting in a difference of -15.1 points.

2. Netherlands – Wage/CPI Index 10-year change: -13.1

The Netherlands is the country with the second-lowest score when comparing inflation and wage growth. Prices in the country rose by 29.8% since 2012, while wages only increased by 16.7%, a difference of -13.1 points.

3. Mexico – Wage/CPI Index 10-year change: -10.8

Mexico takes third place for wage stagnation, as average earnings in the country have failed to keep up with rising costs. Prices in the country have increased by a massive 56.9% in the past decade, though much of this inflation has been mitigated by increasing wages, leaving a difference of -10.8 points.

1. Japan – Wage/CPI Index 10-year change: 56.5

At the other end of the scale, Japan is the country where people are the best off compared to 10 years ago. According to the Consumer Price Index, Japan saw inflation of 10.3% over the last decade. Meanwhile, average wages rose by a considerable 66.8%, with the resulting 56.5 point difference meaning people are now much better off than in 2012.

2. Hungary – Wage/CPI Index 10-year change: 50.5

People in Hungary can enjoy the second-best wage increase compared to inflation, with a difference of 50.5 points. Despite prices rising by as much as 50.5% from 2012 to 2022, the average wage in Hungary effectively doubled with an increase of 100.7%, meaning people in the country are better off financially despite considerable inflation.

3. Latvia – Wage/CPI Index 10-year change: 45.5

The country with the third-best wage growth compared to CPI inflation is Latvia, which saw a difference of 45.5 points. Prices rose by 42.1% in the last 10 years, according to the CPI, but wages in the country increased by 87.6%, giving people in Latvia a much better financial outlook than they had a decade prior.

1. Financial and Insurance Activities
Median 5-year salary change: 7.4%

While one of the better-paid industries, financial and insurance activities have seen the smallest median wage growth in the last five years. In 2017, the median salary for these professions stood at £36,520, rising to £39,231 by 2022, an increase of 7.4%.

2. Mining and Quarrying
Median 5-year salary change: 8.1%

Another high-paying industry with low wage growth is mining and quarrying, which saw the median salary increase by just 8.1% since 2017, when it stood at £38,638. As of 2022, this figure had reached £41,756, the second-highest median salary in our study, which should at least mean that the lowest-paid workers are less vulnerable to wage stagnation.

3. Professional, Scientific and Technical Activities
Median 5-year salary change: 10.3%

In third place, with a 5-year median salary increase of 10.3%, are professional, scientific and technical activities. If you are working in these areas, you could enjoy a median salary of £34,467, rising from £31,245 back in 2017.

Methodology

We wanted to find out which countries have been the worst affected by wage stagnation. To do this, we used OECD data to find the average wage and CPI inflation in each OECD country in both 2012 and 2022. We calculated the percent change for each factor and revealed the countries with the lowest and highest wage growth and CPI inflations over the 10-year period.

We then compared the % increases for both wage and CPI inflation data, revealing the countries where inflation outpaced wage growth the most. We also revealed the countries where wage growth outpaced inflation the most.

Our final section investigated the difference in wage growth between industries in the UK. We used ONS wage data for 2017 and 2022 and calculated the % difference between the two figures, revealing the industries with the lowest wage growth.

Average wage data for different countries was given in local currencies, so we also translated this into GBP based on historical exchange rates using exchangerates.org and OFX.

All wage increases were calculated using local currencies. The original wage data for Latvia and Lithuania was given in discontinued currencies, so we calculated the % increase by converting the 2012 figures into Euros to compare to their 2022 data.