Over the past five years, the average hourly wage in the EU has risen by 21.9%, but prices have risen even faster—by 25.6%. As a result, Europeans’ real incomes have fallen by about 3%, despite the nominal increase in wages. Learn more about which European countries have seen real wage growth and where people are now earning less

Order a working guide and get clear instructions for legal employment abroad

ORDER GUIDE

Wages in Europe have risen significantly on paper over the past five years, but not always in real life. According to Euronews data based on Eurostat calculations, the average hourly wage in the EU increased from €21.50 in 2020 to €26.20 in 2025. This represents a 21.9% increase; however, consumer prices rose by 25.6% over the same period.

As a result, total real wages in the EU have fallen by approximately 3%, meaning that the purchasing power of many households has actually declined. The best performance was mainly seen in countries with lower wage levels and non-eurozone states, while real incomes declined in the EU’s largest economies.

Earlier, we talked about the European countries where it is easiest to get a work visa and start a career abroad.

Are you planning to work abroad in 2026? Visit World's Work Guide will help you quickly understand the requirements for a work permit, the list of necessary documents, and the application procedure. The guide contains current employment rules, the main types of permits, common mistakes made by applicants, and practical advice after moving. You will receive structured information in PDF format within a few minutes after ordering. Check out the guide and prepare for working abroad without any stress.

Why are wages rising in Europe, but people haven’t gotten richer?

Following the COVID-19 pandemic, the European labor market faced several crises at once: an energy shock, record-high inflation, rising food prices, and high housing costs. That is why even significant wage increases in many countries failed to offset the real rise in prices.

According to Eurostat, the average hourly wage in the EU increased by nearly 22% over five years—from €21.50 to €26.20. However, inflation during this period reached 25.6%, causing real household incomes to effectively decline by approximately 3%.

The sharpest rise in prices in Europe was observed in 2022–2023. The main reasons were:

- A sharp rise in energy prices following the start of Russia’s full-scale war against Ukraine;

- Record-breaking increases in food prices;

- Rising costs for housing rent and utilities;

- A general economic slowdown across EU countries.

This hit countries with slow wage growth particularly hard. For example, in Italy, the nominal hourly wage rose by only 9.5% over five years—the lowest rate among EU countries. As a result, Italians’ real incomes fell by 9.2%, the worst result in Europe.

A similar situation was also observed in:

- Spain — real wages fell by 5.9%;

- France — by 3.3%;

- Germany — by 3.2%.

Economists attribute this to the fact that the EU’s major economies experience more stable but slower wage growth. At the same time, Eastern European countries continue to catch up more rapidly to the average European income level due to labor shortages, robust economic growth, and talent competition.

In our previous article, we discussed which EU countries are leading in remote work in 2026.

In which European countries have real wages grown the most?

The largest growth in real wages over the past five years has been recorded primarily in Eastern and Southeastern European countries. It is these countries that have managed not only to increase nominal household incomes but also to partially outpace inflation.

Bulgaria emerged as the absolute leader.

According to Eurostat, real wages there rose by 37.4% between 2020 and 2025. By comparison, the EU average for this period was negative.

The following countries also showed very high growth rates:

- Serbia — +25.4%

- Croatia — +21.1%

- Lithuania — +21.1%

- Romania — +19.7%

- Hungary — +18.8%

In most of these countries, wages grew faster due to active economic development, labor shortages, and large-scale labor migration to Western Europe. Businesses were forced to raise wages to retain staff.

Among Eurozone countries, the best performance was shown by:

- Slovenia — +14.4%

- Latvia — +10.6%

- Greece — +8.6%

At the same time, the largest EU economies were among the laggards. In Germany, France, Spain, and Italy, real wages over the past five years have failed to keep pace with inflation.

Real change in gross hourly wages and salaries (2020–2025). Source: Euronews

In our previous article, we discussed which professions are in highest demand in the Baltic states and how much one can earn in 2026.

How has inflation “eroded” wage increases in Europe?

In many European countries, nominal wages have grown at record rates over the past five years. However, due to high inflation, a significant portion of this growth has effectively lost its value.

This is most evident in Eastern European countries. In Bulgaria, hourly wages rose by 84.2%, but inflation over the same period stood at 34.1%. In Hungary, wages rose by 82.7%, but consumer prices jumped by 53.7%. In Romania, household incomes rose by 73.1%, while inflation reached 44.6%.

Despite this, real wages in these countries still remained in the “black,” as income growth outpaced price increases.

The situation was different in Western European countries. There, inflation remained lower, but wages also grew much more slowly. For example:

- In Italy, nominal wages rose by only 9.5%

- In Malta—by 13.3%

- In France—by 14.1%

As a result, even relatively moderate inflation was enough to cause a decline in real household income.

Economists also note that the sharpest price increases in Europe occurred precisely in basic household expenses:

- Electricity and gas;

- Food;

- Rent;

- Transportation;

- Utilities.

That is why many Europeans, despite nominal wage increases, began spending most of their income on daily necessities and experienced a decline in their standard of living.

Cumulative growth in nominal hourly wages compared to consumer prices (2020–2025). Source: Euronews

To learn more about the ranking of minimum wages in Europe in 2026, please follow the link.

Where in Europe are the highest and lowest wages right now?

Despite rapid income growth in Eastern European countries, the wage gap within the EU remains very wide. The difference between the highest and lowest hourly rates in Europe is now more than fourfold.

The highest average hourly wage in 2025 is recorded in Luxembourg—€49.70 per hour. This is nearly twice the EU average.

Countries with the highest wages also include:

- Denmark;

- Belgium;

- the Netherlands;

- Germany;

- Austria.

It is the countries of Northern and Western Europe that traditionally remain leaders in terms of income levels thanks to strong economies, high labor productivity, and a well-developed social protection system.

The lowest wages in the EU are currently found in Eastern European countries. The lowest figure was recorded in Bulgaria—just 10.5 euros per hour. Despite active income growth, the country still lags significantly behind wealthier EU members.

Among the largest economies of the European Union:

- Germany has the highest hourly wage—34.5 euros;

- France and Italy remain close to the Western European average;

- Spain has the lowest figure among the major EU economies—€19.50 per hour.

Experts note that the wage gap between Eastern and Western Europe is gradually narrowing, but the convergence process remains slow. Even countries with the highest income growth rates cannot yet compete with wages in Luxembourg, Germany, or Denmark.

Gross hourly wages and salaries in European countries. Source: Euronews

Learn more about professions that offer the best chances for employment in the EU by following the link.

Why are Eastern European countries growing faster than the major EU economies?

The past five years have shown a clear trend: Eastern European countries are raising wages significantly faster than the EU’s largest economies. The main reason is an attempt to close the long-standing income gap between “old” and “new” EU members.

One of the key factors has been a labor shortage. Following the pandemic and amid large-scale labor migration, many companies in Poland, Romania, Bulgaria, and Croatia faced a shortage of workers. To retain employees and prevent them from leaving for Germany, France, or the Netherlands, businesses began raising wages more aggressively.

Additionally, the following factors influenced income growth:

- An increase in the minimum wage;

- Rapid economic growth following the pandemic;

- Investments by international companies in manufacturing and the IT sector;

- Competition for skilled professionals.

For example, Poland has become one of Europe’s largest manufacturing and logistics hubs in recent years, while Romania and Bulgaria are actively attracting technology and outsourcing companies due to lower business costs.

The situation is different in the major economies of Western Europe. Wages there have long been at a high level, so the pace of their further growth is naturally slowing down. Additionally, employers in these countries are more cautious in response to inflation due to high business costs and the risks of an economic slowdown.

Economists predict that the trend toward faster wage growth in Eastern Europe may continue in the coming years. However, even at these rates, it will take many more years for incomes to fully catch up with those in Western Europe.

If you are planning to work abroad in 2026 and want to better understand the rules of employment, work permits, taxes, and basic employee rights, it is worth preparing for the move in advance. Visit World's practical working guide will help you navigate the current requirements, types of work permits, and steps to take upon arrival to avoid common mistakes and feel confident in your new life abroad.

We remind you! New economic indicators show which countries have been able to increase their GDP and which have lost ground due to inflation and slowing growth. Ranking of the richest countries in the world in 2026 — follow the link.

Products from Visit World for a comfortable trip:

Travel guide for 200 countries;

Legal advice from a local specialist on visa and migration issues;

Travel insurance around the world (please select the country of interest and citizenship to receive services);

Medical insurance all over the world.

We monitor the accuracy and relevance of our information, so if you notice any errors or inconsistencies, please contact our hotline