After two years of dealing with a pandemic, European countries are now shaken by record levels of inflation and flagging growth. To help households cope with this situation, which currently shows no sign of improving, governments and employers across Europe are adopting evolving policies.
As a result of inflation, an increase in salary and benefits is expected or already occurring in the jurisdictions covered in this guide. In some countries, such as France and Poland, the government adjusts the statutory minimum wage based on the inflation rate. In the Netherlands and Ireland, an exceptional increase in the statutory minimum wage will apply starting on 1 January 2023; in Belgium, Denmark and Spain, the minimum wage is provided by the sector-wide trade collective bargaining agreements, some of which include indexation mechanisms.
Even where the law mandates salary increases based on inflation, the persistent high inflation is sparking strikes and protests across Europe because such increases do not match the pace of inflation.
Littler generated this graph based on the “Inflation rate, average consumer prices” data provided by the International Monetary Fund.
As an additional remedial measure, several governments are allowing employers to grant exceptional tax and/or social security exempted bonuses to employees for a limited period. For example, Austria, France, Germany, Italy and Poland have implemented such types of bonuses and tax exemptions.
In more than half of the...
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