Italian Real Wages Drop 7.5% Since 2021, OECD Reports

Rome: The OECD’s 2025 Employment Outlook report has highlighted a significant decrease in Italian real wages, marking a 7.5% decline since early 2021.

According to Ansa News Agency, the report indicates that Italy has experienced the largest fall in real wages among major OECD economies. Despite the renewal of several major collective agreements over the last year, which resulted in higher-than-usual negotiated wage increases, these adjustments were insufficient to fully offset the loss in purchasing power due to inflation. At the beginning of the first quarter of 2025, one-third of private-sector employees in Italy were still under expired collective agreements. The report projects that real wage growth in Italy will remain subdued over the next two years.

Nominal wages, or compensation per employee, in Italy are expected to increase by 2.6% in 2025 and 2.2% in 2026. Although these increases are significantly lower than those in most other OECD countries, they are forecasted to allow Italian workers to achieve modest real-term gains, given that inflation is anticipated to be 2.2% in 2025 and 1.8% in 2026.

The report also noted that Italy’s labor market has shown resilience in recent years, despite early signs of slowing down. Since late 2022, economic growth has decelerated, yet Italy has reached record levels of employment and low unemployment and inactivity rates. In May 2025, Italy’s unemployment rate was recorded at 6.5%, which is slightly lower than the previous year and significantly lower than pre-pandemic levels, although it remains above the OECD average of 4.9%. Looking forward, despite uncertainties due to global trade disruptions, the unemployment rate in Italy is expected to remain stable through 2025 and 2026. Total employment is projected to grow by 1.1% in 2025 and 0.6% in 2026.