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Danish wages 'can keep up again' with inflation

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Ritzau/The Local - [email protected]
Danish wages 'can keep up again' with inflation
Wages can now keep up with the inflation rate but not enough to make up the last year's lost ground. File photo: Kristian Djurhuus/Ritzau Scanpix

A confederation for employers in Denmark says that wage increases in the country are once again able to match inflation, meaning wage earners are not losing purchasing power due to price increases.

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An analysis of the second quarter of 2023 by the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA) found that wages have increased by 3.4 percent over the last year.

The most recent estimate of inflation, published by Statistics Denmark last month, is 3.1 percent.

DA is a confederation representing the interests of 11 employer unions in the Danish private sector, including the Confederation of Danish Industry and the Danish Chamber of Commerce as well as Horesta, the branch organisation for hospitality sector businesses.

READ ALSO: Cost of living: How expensive is Denmark today compared to 2021 and 2022?

The increase in wages reflects a series of collective bargaining agreements between the employer organisations and trade unions in various sectors earlier this year. Payrises in response to inflation were a key element of the deals.

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Economist Brian Friis Helmer of Arbejdernes Landsbank say the data published by DA shows that the wage increases are now able to cover the impact of inflation on consumers’ spending power. Inflation peaked at almost 11 percent in October last year but has since declined considerably.

“Danes’ wages are again on the way to overtaking price trends. That is good news in every way for Danish wage earners,” Helmer said.

“They saw their real wages knocked down considerably last year when inflation was spiralling,” he said.

READ ALSO: EXPLAINED: What is a Danish collective bargaining agreement?

But wages will need to move further ahead of inflation for consumers to make up for the loss of spending power inflicted on them by inflation, he warned.

“But what has been lost has certainly not been regained and it will probably take a few more years before that happens,” he said.

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