ECB expects wage growth to ease considerably this year

[FRANKFURT] Wage growth in the eurozone is expected to ease considerably this year, according to data from the European Central Bank released on Wednesday (Apr 23).

The ECB’s wage tracker, which covers active collective bargaining agreements, sees wage growth with smoothed one-off payments slowing to 3.1 per cent in 2025 after 4.8 per cent in 2024.

Wage development in the 20-country currency bloc offers key insights into inflation for the central bank, which last week cut interest rates for the seventh time in a year as it steers towards its 2 per cent inflation target.

The ECB has offered few signals about future moves, although it has warned that erratic US trade policy is bound to weigh on growth.

Excluding one-off payments, the downward trend in wage growth is less pronounced, at 3.8 per cent this year following 4.2 per cent in 2024, according to the ECB.

Wages in the eurozone have had a boost in recent years as workers called for compensation to offset high inflation, which reached double-digits for a spell in 2022 following the invasion of Ukraine and the resulting drop-off in energy imports from Russia.

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Inflation has since fallen considerably, coming in at 2.2 per cent for the eurozone in March. REUTERS