A key source of inflationary pressure, wage growth, appears to be slowing across Europe, according to new data from the European Central Bank (ECB).
The bank’s wage tracker — which is not a forecast, but reflects available data on active collective bargaining agreements — indicated that the growth of negotiated wages (smoothed for one-off payments, such as back pay, and bonuses) grew by 3.2% for 2025, and will slow to 2.3% in 2026.
Looking at 2026 on a quarterly basis, the headline ECB wage tracker sees wage growth of 2% in the first quarter, 2.1% in the second quarter, 2.5% in the third quarter and 2.7% in the fourth quarter.
“The rise in the wage path over the course of the year is related to the dissipation of the mechanical downward effect of large one-off payments that were made in 2024 but not in 2025,” it said.
Looking at the wage picture on an unsmoothed basis, the ECB said that growth will come in at 3% this year, slowing to 2.7% in 2026 (3.1% in the first quarter, 2.5% in the second quarter, 2.4% in the third quarter and 2.7% in the fourth quarter).
The data point to a “more stable and less volatile outlook in negotiated wage growth for 2026 in comparison with previous years,” the ECB said.