Wage pressures in Eurozone to ease in 2025

Ahead of the ECB meeting, we look at the wage tracker in the Eurozone. Until 2019, all wage tracker indicators suggested mild negotiated wage growth. Further, the pandemic-related economic shutdown and job retention schemes kept negotiated wage pressures weak in 2020 and 2021. The subsequent inflation surge in 2022 gave rise to a gradual increase and a stronger prevalence of one-off payments used to compensate employees for the effects of high inflation. The wage pressure has increased more visibly. It is expected to ease, however. The headline ECB wage tracker is currently anticipated to peak at around 5.4% at the end of 2024 before gradually easing to an average of 3.2% during 2025. The tracker with unsmoothed one-off payments is currently averaging 4.8% in 2024 and implies a decrease to 2.7% in 2025.