Real wages have fallen across Europe over the past year while corporate profits have soared, according to a recent study by the European Trade Union Confederation (ETUC).
The report noted that average real wages (which account for inflation) in the EU fell by -0.7% in 2023, despite real profits having risen by 1.5%.
In total, nine EU Member States experienced a decrease in real wages but an increase in real profits this year, including Germany (in which salaries fell by 1.3% but net earnings grew by 1%) and France (where wages declined by 0.2% but profits rose by 1.4%). Profits were also reported to have risen faster than inflation in 10 EU countries.
"Since the pandemic, the pay packets of European workers have been shrinking despite corporate profits ballooning," said ETUC General Secretary Esther Lynch.
"CEOs and shareholders have got richer while people working long hours in tough jobs struggle to feed their families and warm their homes," she added.
European Trade Union Confederation General Secretary Esther Lynch. Credit: Facebook / ETUC
What's really driving inflation
Lynch also restated the ETUC's stance that increasing corporate profits, rather than rising wages, are the principal cause of Europe's inflation crisis – a conclusion corroborated by both the International Monetary Fund (IMF) and the European Central Bank (ECB).
She noted that the European elections next year offer a potential "turning point" in EU policy, and urged the bloc's policymakers to address the imbalance between wages and corporate earnings by imposing windfall taxes on excess profits and strengthening collective bargaining rights.
"It's time for policies which address the number one cause of this crisis – corporate greed – and deliver a fair deal for working people."
Wage and profit data for Belgium were not included in the ETUC study. However, according to a report published earlier this year by the Organisation for Economic Co-operation and Development (OECD), a group of mostly rich countries, Belgium and the Netherlands were the only industrialised nations in which real wages increased between the first quarters of 2022 and 2023 (by 2.9% and 0.4% respectively).
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The study also emphasised that Belgium's unique system of government-mandated wage indexations has largely protected workers from the worst effects of price increases over the past year.
The ETUC findings were published just the day after the National Bank of Belgium (NBB) reported that "there is no evidence of widespread 'greedflation' in Belgium", referring to companies' practice of hiking prices by more than is necessary in order to keep up with rising costs.
However, the NBB admitted that the "gross profit margins of Belgian firms have trended upwards over time, with a significant acceleration as of 2014". It added that "gross profit margins remain at very high levels" despite a modest decline since 2022.
