Home > Data, Inflation, Wages > Real Hourly Wages in Europe

Real Hourly Wages in Europe

A follow-up on a post from last month; I managed to replicate the data on House of Commons research on changes in real hourly wages across Europe.  What I wanted to check is whether the UK is an outlier in terms of hours worked.

The research commissioned by Labour looks at changes between 2010Q2 and 2012Q4, so I’ve done the same.  The Eurostat data I’m using has had one quarter of revisions since the HoC report was written, so the results have minor differences; Germany has real wages growing +2% over this period rather than the cited +2.7%.

Real hourly wages are found using nominal hourly labour costs from the Labour Cost Index series, and deflated using the all-items HICP.  This isn’t necessarily the best definition of real hourly wages; using the GDP deflator might be more interesting, but I’ve stuck with the HICP.

The table below compares the change in real hourly wages and the change in actual hours worked from the quarterly national accounts, between 2010Q2 and 2012Q4.  It is sorted by the change in real wages, and I’ve included only countries with population >1m, sorry Malta et al, you are just not that interesting.  The averages for the EU27 and Eurozone are also included.  All figures non-annualized.

Country Change in real
hourly wages
Change in total
hours worked
Portugal -15.9 -9.2
Greece -15.8 -16.8
Spain -8.1 -8.2
United Kingdom -5.5 3.1
Italy -4.3 -0.9
Slovenia -3.5 -4.7
Netherlands -3.4 0.8
European Union (27 countries) -1.9 -0.3
Euro area (17 countries) -1.5 -0.7
Denmark -1.0 -0.9
Belgium 0.3 2.0
Slovakia 0.3 0.1
Lithuania 0.4 -4.2
Finland 0.9 -1.5
France 0.9 0.1
Poland 0.9 -2.2
Romania 1.1 -2.9
Hungary 1.3 3.4
Germany 2.0 4.6
Estonia 3.0 11.8
Czech Republic 3.9 0.7
Latvia 5.2 -3.6
Bulgaria 13.3 -3.9

What does this say?  The most astonishing aspect is surely the collapse of hours worked in Greece, Portugal and Spain.  Remember this data looks at just an 18 month period, and yet hours worked fell nearly 17% in Greece.

Against all that, the UK does look like something of an outlier.  In this group, of countries with falling real hourly wages, only the UK and the Netherlands had rising hours worked.  The UK in fact has the fourth highest rise in total hours worked of the group, after Estonia, Germany and Hungary.

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Categories: Data, Inflation, Wages
  1. James in London
    September 10, 2013 at 21:07

    Is the degree of freedom of the UK labour market part of the answer? The UK must have by far the most flexible labour market in Europe. Has the UK also had the biggest increase in its labour force, via immigration from the EU and elsewhere? Others having had net emigration.

    • September 11, 2013 at 13:48

      Yeah, flexible nominal wages is I’d say the most important part of the picture.

      • James in London
        September 11, 2013 at 14:17

        The, largely non-unionised, service sector doesn’t fit econ models so well. Zero hours contracts, City bonuses, professional partnerships (think law, accountancy, actuaries, architects, engineers, mngmnt consultants), the whole ‘eat what you kill’ sales brigade.

        Cameron could have added “our intense commercial culture” to his anti-Putin rant about our great attributes, but living in the Westminster village he doesn’t see much of it. And they don’t teach it at Eton, it’s “trade” after all, and just pays for the school.

  2. September 11, 2013 at 19:52

    “our intense commercial culture”… I fear that’s not the Hugh Grant line he was shooting for. :)

    • James in London
      September 12, 2013 at 07:57

      From today’s Times front page I should have added estate agents to my list of those with flexible pay. They fit the “eat what you kill” perfectly. Are they productive? Socially useful, hmmm? I think Dave would have made a good one.

  1. November 3, 2013 at 14:52

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