As purchasing power continues to vary widely across the European Union, a new study from Greece's Centre of Planning and Economic Research (KEPE) sheds light on the persistent imbalance between productivity and wages — a gap that has a direct impact on living standards and income inequality across member states.
The study highlights a structural issue within the Eurozone economy: while productivity tends to rise, real wages have failed to keep pace. This divergence, which has become more pronounced in recent decades, means that the benefits of economic output are not being distributed evenly. The expected link between rising productivity and wage growth has weakened significantly, particularly during and after key economic shocks.
Between 2018 and 2023, the average wage in Greece increased by just 7%, a figure far below the Eurozone average of 19%. Despite this nominal increase, Greece remains one of the lowest-ranked EU countries in terms of purchasing power when wages are adjusted for cost of living differences.
The KEPE study identifies three distinct periods in the evolution of the productivity-wage relationship in the Eurozone. During the first phase, from early 1995 to the first quarter of 2009, productivity steadily outpaced wages. This trend was interrupted by the global financial crisis in 2008, which led to a sharp drop in productivity growth. The second phase, from mid-2009 through mid-2020, was characterized by closer alignment between wage and productivity increases, although this period ended abruptly with the onset of the COVID-19 pandemic. In the most recent period, from the third quarter of 2020 to the end of 2024, productivity has stagnated, while average wages have experienced significant fluctuations — with the general trend being downward.
In Greece, these developments have been particularly stark. Despite a modest rise in employment and improvements in some labor market indicators, wages have not kept pace with broader economic indicators. According to Eurostat, the average full-time adjusted salary across the EU in 2023 was €37,900. In Greece, it was just €17,000 — ranking third-lowest in the bloc, behind only Bulgaria and Hungary. These figures are adjusted for purchasing power, offering a more realistic picture of how far wages actually go in each country.
At the higher end of the scale, countries like Luxembourg, Denmark, Ireland, Germany, and Belgium all reported significantly higher adjusted salaries, in some cases nearly five times that of Greece. This disparity reveals not only the wide income gap within the EU but also highlights how much further Greek workers fall behind in terms of real economic wellbeing.
