Croatia Continues to Lag: In 2022, Average Gross Salary Real Decreased by 2.3 Percent, While Nominal Growth Slower than Comparable Countries

According to the latest data from the Croatian Bureau of Statistics, in December 2022, the average monthly gross salary per employee in Croatia was 10,748 kuna, with an annual growth of 9.3 percent (-3.4 percent in real terms) and a decrease of 0.3 percent compared to the previous month. On an annual basis, the average gross salary in 2022 was 10,400 kuna, which was nominally 8.3 percent higher than the previous year, while in real terms it was 2.3 percent lower, as stated in the announcement.

According to the latest available data from the WIIW Institute for the first nine months of 2022, the average gross salary in Croatia from January to September was 1,375 euros. Croatia thus found itself in the upper part of the ranking based on the average gross salary, below Slovenia where the average gross salary during the same period was 1,984 euros, the Czech Republic (1,596 euros), and Poland (1,393 euros). Compared to other countries in the region, Hungary (1,314 euros), Romania (1,281 euros), Slovakia (1,266 euros), and Bulgaria (873 euros) are behind Croatia, while Serbia (862 euros) is at the very bottom.

However, it is important to emphasize that the dynamic representation over the period since the beginning of 2009 indicates a relatively stronger trend of growth in average gross salaries in comparable countries, while at the same time, the average gross salary in Croatia shows quite modest dynamics of annual growth. Of course, strong inflationary pressures that have been present since the last quarter of 2021 also condition the dynamics of average salary movements in real terms, thus affecting real disposable income.

Significant Impact of Price Increases

In most observed countries in the region, high, mostly double-digit, rates of consumer price growth have outpaced the growth of average gross salaries, resulting in a decline in real terms in the first nine months of 2022. The only exception is Serbia, where the average nominal growth of gross salary in the period from January to September 2022 (+14 percent annually) exceeded the average inflation in the same period (+10.9 percent annually), resulting in a real growth of 3.1 percent.

The latest data from Eurostat shows that the minimum gross salary calculated in the second half of 2022 in Croatia was 622.5 euros. Unsurprisingly, significantly higher minimum gross salaries were recorded in Slovenia (1,074 euros), the Czech Republic (655 euros), Slovakia (646 euros), and Poland (642 euros). Comparable countries in the region with lower minimum gross salaries include Romania (516 euros), Hungary (504 euros), and Bulgaria (363 euros).

It is worth noting, according to the latest available data from Eurostat for 2021, that the minimum gross salary in Croatia accounts for only 44.9 percent of the average gross salary. Poland (50 percent) and Slovenia (51.9 percent) have a higher share than Croatia, while other countries in the region have a lower share of the minimum gross salary in the total average gross salary.

In the current geopolitical situation characterized by high inflation rates and rising living costs, in Croatia, as well as in neighboring countries, high and persistent inflation continues to diminish the real value of salaries month after month, despite positive nominal dynamics of annual growth. On the other hand, relatively strong nominal salary growth is supported by increasingly pronounced demands for salary increases in both the private and public sectors. The fact that there is a labor shortage in certain sectors also contributes to this trend, while Croatia’s salary growth dynamics still lags behind those of neighboring countries.