IDA expects record pay increases in 2024

IDA's salary forecast for 2024 shows that it is realistic for the privately employed members to achieve an average salary increase of 7 per cent. this year.

Recently, the Danish Economic Council published their spring report. In this, both economic growth and employment expectations are adjusted upwards. The adjustment points to the fact that the Danish economy has performed better than expected, and for the same reason there is also the prospect of significant salary increases.

The Economic Council expects an increase in hourly wage costs of 5.7 and 4.6 per cent in 2024 and 2025, respectively. In comparison, the hourly wage increased by 3.8 per cent in 2023. If you look at Statistics Denmark's figures for hourly wage earnings, there will therefore be record-high increases.

"There is reason to expect an acceleration in pay increases. It is the same picture we see among our members. The labour market has been going full steam ahead in recent years, and the appetite for labour is great, and many companies report recruitment challenges," says Anders Overvad, chief economist at IDA.

The salary growth covers both the increases achieved by IDA's privately employed members as a result of job changes and  salary increases.

"The lack of labour is evident to a large extent within the STEM subjects, where IDA's privately employed members received an average salary increase of 6.5 per cent last year. This year, it is our expectation that the average salary increases will land at 7 per cent. It will be the highest increase since we started measuring salary trends back in 2002," says Anders Overvad.

With the prospect of such significant increases, there is also an inherent risk that the pay trend could fuel inflation. It is not an unfounded fear, but if we look at the Economic Council's forecast, there are no indications of a so-called wage-price spiral, IDA's chief economist points out.

"There is room for higher pay increases. Not least in light of the fact that recent years' inflation has eroded purchasing power quite considerably. It will also be good for the economy as a whole if private consumption is strengthened," says Anders Overvad.

"If we look beyond the country's borders, it is not only here at home that salaries are increasing. Fresh figures from Germany show a pay increase rate of 6.2 per cent. As Danish salaries have long been lower than in our neighboring countries, there is no prospect of a deterioration in competitiveness," he says.

Read more about IDA's salary forecast here.