Analytics, Baltic, EU – Baltic States, Wages

 If China, whose large population and rapid wage growth significantly influence the global average, is excluded, global wage growth in real terms fell from 1.8% in 2016 to 1.1% in 2017. Real wage growth is calculated using gross monthly wages, rather than hourly wage rates, which are less frequently available, and fluctuations therefore reflect both hourly wages and the average number of hours worked.

Slow wage growth in high-income countries despite economic recovery and falling unemployment

In the advanced G20 countries, real wage growth declined from 1.7% in 2015 to 0.9% in 2016 and 0.4% in 2017. In Europe (excluding Eastern Europe), real wage growth declined from 1.6% in 2015 to 1.3% in 2016 and further declined to about zero in 2017, owing to lower wage growth in countries including France and Germany, and declining real wages in Italy and Spain; in Eastern Europe, by contrast, real wage growth recovered from its 4.9% decline in 2015 and continued to increase thereafter, from 2.8% in 2016 to 5.0% in 2017.

Real wage growth in the United States declined from 2.2% in 2015 to 0.7% in both 2016 and 2017. Given the recovery in GDP growth and the gradual reduction in unemployment rates in various countries, slow wage growth in high-income countries in 2017 represented somewhat of a puzzle and has been the subject of intense debate. Possible explanations for subdued wage growth include slow productivity growth, the intensification of global competition, the decline in the bargaining power of workers and the inability of unemployment statistics to adequately capture slack in the labour market, as well as an uncertain economic outlook which may have discouraged firms from raising wages.

Wages in Latvia saw steepest rise among Baltic states in 2017

In real terms, wages in Latvia increased by 4.8%, which is the steepest rise among the Baltic states, said the International Labor Organization (ILO) in its annual Global Wage Report.

ILO data suggest that wages increased by 4.7% in Lithuania and by 2.8% in Estonia.

The steepest wage rises in Europe and Central Asia were registered in Ukraine (19.1%), Romania (12.8%), Armenia (11.8%), Bulgaria (10.5%) and Hungary (10.3%).

The steepest reductions in real wages were recorded un Azerbaijan (-6.4%), Turkmenistan (-5.9%), Greece (-3.5%), Kazakhstan (-2.1%), Spain (-1.8%) and Austria (-1.5%).