Real wages fell by 0.3% MoM in July but have risen by 3.4% in the past twelve months, whereas inflation stands at 4.3%. Although inflation is quite high, real wage growth remains robust, although it has settled down somewhat from its February 2021 peak of 6.2%.
The past year’s wage movements are due mainly to contractual pay rises that took effect at the turn of the year and affected a majority of employees in the labour market. This is compounded by the shortening of the work week, which constitutes the equivalent of a change in wages and has pushed wage indices markedly upwards.
Public employees lead in wage hikes
A detailed breakdown of the wage index is available only through May. Breaking the index down by wage-earner group shows that municipal employees’ wages rose most between May 2020 and May 2021, or by 14.5%. They are followed by State employees, at 10.7%, and then private sector workers, at 5.8%. A large proportion of the rise in the wage index, which measured 7.5% YoY in May, is therefore due to the public sector. It is worth noting that on the whole, the shortening of the work week affected public employees more than those in the private sector, and the impact of the public sector on the wage index was commensurably stronger.
Real wage boost for low-income workers
It is interesting to examine which occupations in the private sector have received the largest pay rises. General workers benefited from the largest proportional pay hikes between May 2020 and May 2021, or 8.4%, followed by workers in service and sales, with 7.3%. Over the same period, specially educated workers’ wages rose least (3.9%), followed by specialists’ wages (4.2%). Because inflation measured 4.3% in May, the latter groups’ real wages remained flat or deteriorated slightly in the twelve months leading up to May 2021, whereas the former groups’ real wages rose 3-4% over the same period.