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, following broadly steady increases for the rest of this year.
- The European Central Bank has long maintained that wage growth around 3% is broadly consistent with its 2% inflation target, with recent projections pointing to only modest pay pressures amid labour market softness.
- Eurostat reported on Sept 16 that annual labour cost increases slowed to 3.1% in the second quarter from 3.3% three months earlier, reversing peaks above 5% during the 2022/23 inflation 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 recent inflation acceleration.
- 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.
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15 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.
According to data released by the central bank last week, wages are expected to rise by 2.7% annually.
According to the EKT wage tracker, the core wage index will be 2.7% in the first quarter of 2027 and 2.8% in the second quarter of 2027.
The European Central Bank's wage indicator (ECB) notes a 2.7% increase in negotiated wages for the first half of 2027, which points to "a modest increase".
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