Average Annual Wages Growth

According to the first results of Croatian Bureau of Statistics, the average monthly gross salary per employee, in legal entities, was 7688 HRK in April, while the average net salary was 5633 HRK. Hereby, compared to March, gross salary is 137 HRK decreased (1.8%), while at the same time net salary is 89 HRK, or 1.6%, decreased. It is very common (since 2004) that the salaries in April are lower than the ones in March, probably due to less work days.

Compared to the last year’s April, gross salary is 68 HRK higher (0.9%), while at the same time net salary is 38 HRK higher (0.7%). As the consumer prices continue to drop on the annual level, real wages growth was significantly higher, so the gross salaries became 2.6% higher and net salaries 2.4%. Gross salary growth which is faster than the net salary growth represents the dynamics which is higher in all this year’s months. This is certainly linked to the cessation of the influence of the changes in the income tax, which were influencing strong last year’s growth of the net salary. Unfortunately, the dynamics of this year’s wages growth is not comparable to the last year’s wages growth, due to the change in methodology, or due to the transfer to the new source of data (JOPPD form), which ensures a more complete coverage of the wages data, compared to the earlier statistical research (RAD-1 form).

To summarize, during the first four months of this year, compared to the same period of the last year, average monthly gross wage growth was 162 HRK or 2.1%, while at the same time average net wage growth was 97 HRK or 1.7%. Hereby, wages growth (which is linked to the recovery of national economy) is continuing.

Wage growth is specific for the majority of other European countries as well, especially for the ones that lag behind the European average. Among the countries similar to Croatia, as the countries with the average wage higher than 100 Euros, there are Slovenia (151i EUR), Croatia (1062 EUR) and Poland (1002 EUR). According to gross salary, the next countries coming to the list are Slovakia (973 EUR), Hungary (849 EUR), Monte Negro (751 EUR), Bosnia and Herzegovina (659 EUR), Romania (644 EUR) and Serbia (549 EUR). At the same time, high gross wage growth on the annual level is present in Romania (12.3%), Serbia (7.9%), Hungary (6.4%) and Poland (5.9%).

High wage growth in Romania is partly the result of measurements for the stimulation of consumption (reduced general rate of VAT, as well as reduced rate of this tax on food and reduced social contributions rate), but it could also be the result of the implementation of the stimulatory policies for the income taxation, especially of the high salaries in the ICT sector, which attracts the employment of the ICT experts, thus increasing the level of average wages.

We expect the trend of wage growth will remain present in the rest of the year and it should not harm the country’s competitiveness significantly, especially considering the fact that the majority of similar countries are facing even higher wages growth and labour costs. However, if the dynamics of the economic growth is slow, disruption of the relationship between wage developments and labour productivity is a realistic threat, especially if the dynamics of the GDP growth does not accelerate.

Zvonimir Savić, Director of the Financial Institutions, Business Information and Economic Analyses Sector: “During the first four months, the slow gross and net growth is continuing, which is the result of the economic growth, but also of the deflation trends. We expect that trend to continue in the rest of the year. It should not harm the country’s competitiveness significantly, considering the fact that the majority of similar countries is facing even higher wages growth and labour cost.”