Italy’s wages slump 30 years as real pay falls about 6% despite higher employment

The Parliamentary Office of Budget (UPB) reports that real wages for private‑sector employees in Italy have declined by roughly 6 % between 1990 and 2026, a trend that persists despite record levels of employment. The drop is driven by weak productivity growth, a fragmented labour market with rising part‑time and precarious contracts, and a fiscal drag caused by IRPEF brackets that are not indexed to inflation. Tax reforms in 2014 and 2025 eased the burden on low‑income earners, but have increased the effective tax load on middle‑ and high‑income workers, further eroding purchasing power.

Regional data show especially low average earnings in the South, such as Abruzzo where annual salaries are around €21 000, well below the national private‑sector average of €25 000. Analysts and business leaders, including Marco Ballarè of Manageritalia, call for a deep redesign of the IRPEF system that lifts the tax threshold for the middle class and curtails fiscal drag. Without structural reforms to boost productivity and reduce labour‑market fragmentation, Italy’s wage stagnation is likely to continue undermining consumption, competitiveness and talent retention.