ECB’s Wage Tracker Points to Modest Uptick in Negotiated Pay Growth
The bank said negotiated pay growth could reach 2.8% next year as labour costs eased to 3.1% in the second quarter, Eurostat data showed.
- On Sept 16, European Central Bank data indicated negotiated pay growth will see a modest uptick in the first half of 2027 after broadly steady increases for the rest of this year.
- The European Central Bank has long maintained that wage growth around 3% is consistent with its 2% inflation target, with recent projections pointing to modest pay pressures given softness in the labour market.
- Eurostat reported on Sept 16 that annual labour cost increases slowed to 3.1% in the second quarter from 3.3% three months earlier, declining sharply from peaks above 5% during the 2022/23 crisis.
- Negotiated wage contracts point to only a mild pickup next year, offering European Central Bank policymakers comfort that price growth remains under control despite accelerating inflation.
- The European Central Bank has raised interest rates twice this year, asserting that only moderate policy tightening is required as the current inflation shock remains milder than in 2022.
17 Articles
17 Articles
ECB's wage tracker points to modest uptick in negotiated pay growth
The two main components of labour costs are wages and salaries and non-wage costs, which increased respectively between April and June, 3.0% and 3.25% in the euro area.
The hourly labour costs in the euro area increased 3% in the annual comparison in the second quarter of 2026, after a 3.2% increase in the previous period, as the preliminary estimates showed. This result marked the slower rate of growth since the fourth quarter of 2021. Wages and wages rose 3.0%, slowing down from 3.3% in the first quarter, while non-wage costs advanced 3%, accelerating up from 2.8% in the previous quarter.
Euro Zone Labor Costs Rise 3.1%, Wage Growth Continues To Moderate
Euro zone wage growth continued to slow last quarter even as inflation picked up, and negotiated wage contracts point to only a mild pickup next year, offering European Central Bank policymakers comfort that price growth remains under control. The ECB is keenly watching wage developments to see if the recent energy price-induced inflation surge is fuelling undue pay demands, as this could set off a hard-to-break wage-price spiral that would requ…
Key takeaways According to a recent report by the European Central Bank, wage growth in the eurozone will gain momentum by 2027, although it will remain significantly lower than previous peaks. The bank’s most recent wage data shows that annual wage increases in the first quarter of next year will amount to 2.7 percent […]
According to data released by the central bank last week, wages are expected to rise by 2.7% annually.
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