May the 16th, 2025 – Croatia dominates the more immediate region when it comes to average wage growth in 2024 according to The Vienna Institute for International Economic Studies.
As Sinisa Malus/Poslovni Dnevnik writes, according to the latest data from the Vienna Institute for International Economic Studies, Croatia dominates the region in terms of average wage growth, with 1,877 euros in December 2024.
The data for December completes the statistics for the entire year of 2024, in which the average wage amounted to 1,846 euros. As such, compared to its neighbouring countries, Croatia is still in the upper part of the scale in terms of average gross salary.
for croatia, average wage growth has been promising
The highest average gross salary in the period from January to December 2024 was recorded in neighbouring Slovenia, which amounted to an average of 2,395 euros. Slovenia was followed by Poland (1,912 euros) and the Czech Republic (1,846 euros), and then came Croatia. Lower average gross salaries than the aforementioned countries were recorded in Hungary (1,635 euros), Slovakia (1,537 euros) and Bulgaria (1,174 euros).
When Croatia is observed over a longer period of time (more specifically since 2009) compared to its neighbouring countries, the growth dynamics of average gross salaries have been relatively slow. However, in the past few years, the trend has change. There has been a marked acceleration of the growth of average gross salaries. This is also a consequence of the strong growth of salaries in the public sector as a result of the comprehensive reform of salaries of public and civil servants in 2024. Naturally, strong inflationary pressures that have been present since the last quarter of 2021 also determine the dynamics of average salaries in real terms, which also reflects on real disposable income.
In most of Croatia’s observed neighbouring countries, the average growth rates of consumer prices (measured by the harmonised consumer price index) in the observed period were still significantly above the target levels of central banks.
inflationary woes
Although the dynamics have been slowing down, significant average annual inflation rates in 2024 were recorded in Romania (+5.9%), Serbia (+4.8%), Croatia (4.0%), Hungary and Poland (both +3.7%), Slovakia (+3.1%) and finally Slovenia (+2.0%). The slowdown in inflationary pressures coupled with the continued growth of nominal wages has resulted in relatively strong growth rates in real terms. In Croatia, for example, the double-digit growth in average nominal wages reflects the increase in personal allowances and tax changes from the beginning of the year. The aforementioned reform of the public sector wage system also plays a role.
In real terms, among the observed countries, a decline in gross wages at an annual level was recorded only in the Czech Republic (-0.3%). On the other hand, a positive real rate was recorded in Poland (+13.0%), Bulgaria (+12.4%), Croatia (+10.5%), Hungary (+5.3%), Serbia (+9.1%), Romania (+8.6%), Slovakia (+4.2%) and Slovenia (+5.7%).
productivity is more modest
The latest Eurostat data (published periodically twice a year) show that the minimum gross wage calculated for the second half of 2024 in Croatia amounted to 840 euros. As expected, significantly higher minimum gross wages were recorded in Slovenia (1,254 euros) and Poland (998 euros). Comparable countries in the region that had a lower minimum gross wage are: Bulgaria (477 euros), Hungary (675 euros), Romania (743 euros), Slovakia (750 euros) and the Czech Republic (755 euros).
For Croatia, the already realised average wage growth and high employment in 2024, along with a structural labour shortage, implies the continuation of solid nominal wage growth rates in the observed countries. With the expected further easing of inflationary pressures, real wage growth will also continue. However, the issue of productivity (measured by GVA per employee) has now been raised. In the current economic environment in some of the observed countries, that will probably grow at a somewhat more modest pace than wage growth. On the other hand, the potential vulnerability of the labour market is becoming increasingly relevant, and the current resilience of the labour market is facing new challenges.
labour market challenges for croatia
For Croatia, the ongoing labour shortage has encouraged many companies to retain their employees. This is primarily done as a protection measure because of the expensive and lengthy process of hiring new workers, once economic growth strengthens again. Labour retention reflects the entirely inadequate utilisation of the domestic labour force, which negatively affects productivity growth. At the same time, the increasing labour shortage has seen the bargaining power of employees for higher wages increase. That in itself creates additional pressure for Croatia when it comes to average wage growth. It can consequently affect inflationary pressures.
