This was supposed to be the year European wages started to catch up with inflation, but the economic fallout of Russia’s invasion of Ukraine leaves many EU workers facing even bigger pay cuts in real terms, according to union officials and executives.
Consumers across the region have been grappling with soaring prices for electricity, fuel, food and other goods for over six months. But a strong eurozone jobs market, with the unemployment rate hitting a record low of 6.8 per cent in February, and reports of labour shortages for many EU companies prompted economists at the start of the year to predict strong wage growth.
Now many companies, including key employers such as car manufacturers, chemical companies, food producers and steelmakers that depend on Russia and Ukraine for imports, could be plunged into crisis mode. The growing risks of energy rationing and production shutdowns are undermining the case for big pay increases, despite the booming job market and need to protect workers from higher inflation.