Real wages fell by 8.5 percent

0
68

Published 30 January 2023 at 10.30

Economics. The average wage rose by 3 percent in November, compared to the same month last year. But the real wage actually fell by 6.5 percent due to inflation of 9.5 percent. And if rising mortgage interest costs are included in inflation, the real wage fell to a whopping 8.5 percent.

Like the article på Facebook

This shows the latest monthly statistics from the Mediation Institute.

– The wage increase rate has been stable around the same level since spring 2022, when a majority of employees last negotiated wages. The high demand for labor could have influenced the rate of wage growth in a positive direction during the autumn compared to the spring, but it does not seem to have happened to any noticeable extent, says Medlingsinstitut's macroeconomist Petter Hällberg.

The average wage growth rate for calendar year 2022 is lower than the November figure alone due to low contracted wage increases in the first quarter. As of January, wages in the entire economy have increased by an average of 2.7 percent. The rate of increase has been higher in the private sector than in the public sector.

– In the private sector, the average wage has increased faster for white-collar workers than for blue-collar workers for a couple of years, but in the last six months the differences have narrowed. In November, wages are expected to have increased at an annual rate of 3.3 percent for workers and 3.4 percent for white-collar workers when the statistics become definitive.

The inflation rate in November amounted to 9.5 percent according to the CPI with a fixed interest rate. The average real salary thus fell by 6.5 percent compared to the previous year. If rising mortgage interest costs are factored into inflation, the real wage fell by two percentage points further, i.e. a drop of 8.5 percent.

– During last year, there was a certain increase in the private sector's rate of wage growth, but without reaching the proximity of the dramatic rise in inflation. Real wages have fallen significantly, but at the same time wage growth has generally not contributed to the rapid price increases that eroded purchasing power, says Petter Hällberg.