Wage Growth in Euro Zone Expected to Ease

FRANKFURT (Reuters) – Wage growth in the euro zone is expected to ease considerably this year, according to data from the European Central Bank (ECB) released on Wednesday.

The ECB’s wage tracker, which covers active collective bargaining agreements, sees wage growth, including smoothed one-off payments, slowing to 3.1% in 2025 after 4.8% 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% inflation target.

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

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

Wages in the euro zone 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.

Inflation has since fallen considerably, coming in at 2.2% for the euro zone in March.