Employers in the real sector have significantly raised salaries throughout the past year in the battle to retain every worker, especially those with the most competitive skills in the domestic market. The salary growth has continued into this year.
In February, the growth of salaries accelerated, with the nominal gross salary for February (EUR 1,522) paid in March being 13.4 percent higher year-on-year (13.1 percent in January). The real salary growth also accelerated to 1.3 percent year-on-year from 0.4 percent in January.
The growth of the average net salary (EUR 1,106) is slightly higher (+11.8 percent) compared to January, while the real decline in net salaries slowed to -0.2 percent year-on-year (-0.9 percent in January). Earlier than expected real improvements are a reflection of the strong growth of the minimum wage (+12.2 percent), a series of indexations at the beginning of the year, and the slowing of inflation alongside ongoing labor market tensions that exert pressure on salary growth in the real sector.
Given the continuous solid employment growth of 2.5 percent in the first quarter of this year, there are evident positive risks in the labor market regarding consumption growth and ultimately GDP, emphasizes the Croatian Employers’ Association in its weekly analysis.
Namely, early data from the labor market this year signal that the demand for workers will remain high, and the pressure on salary growth combined with the weakening of inflation will enhance the recovery of real salaries, i.e., purchasing power. This year, HUP expects an employment growth of around 2 percent with a decrease in the unemployment rate to 6.5 percent from 7.0 percent last year.
