Net real wages decelerated growth from 3.4% y/y in December to 2.2% y/y in January, according to figures of the statistical office, published on Thursday. Note that consumer price inflation eased down to 1.5% y/y during the month, down from 1.7% y/y in December. The deceleration came despite the 4.7% hike of the minimum wage implemented as of January. The slowdown was broad-based as both the public and private sectors registered a slowdown to 2.0% y/y and to 2.7% y/y in real net terms, respectively.
Regarding the breakdown by sectors, the most significant wage increase was registered by the mining industry – up by 32.5% y/y. Meanwhile, the most tangible deceleration was marked by the electricity sector, where wage growth decelerated to 3.8% y/y. Wage growth in the manufacturing sector also eased down by 3.1pps m/m to 5.1% y/y in January, after in December it reached its highest growth rate since August 2010. Note that the IMAD, the government’s macroeconomic think-tank, warned in October last year that the sector is already facing labour shortages, expecting that this will lead to steeper wage growth in the longer term.
Looking forward, we do not expect any wage growth deceleration in the near term. Wage growth should pick up again in the near term and continue to aid household consumption. Note that the government continues to face strong pressure from public sector trade unions for higher wages as the trade union of teachers held its second strike for this year yesterday (Mar 14). Now that PM Cerar has filed his resignation, general elections scheduled for this summer are expected to take place a couple of weeks (if not months) earlier and thus the decision on public sector wages might be passed onto the next government.