ECB expects euro area wage growth to slow by end of 2026

The European Central Bank has reported a stabilization of wage pressure across the euro area. According to a new index based on collective agreements signed by mid-April 2026, growth in negotiated wages is expected to be around 2.6% by the end of next year.

According to ECB data, the wage index adjusted for smoothed one-off payments shows growth of 3.2% in 2025 and a slowdown to 2.3% in 2026. These figures remain virtually unchanged compared to the regulator's March assessment.

A similar dynamic is observed in calculations without smoothing one-off payments. In this case, wage growth is projected at 3.0% in 2025 and 2.6% in 2026. Excluding additional payments, the figure is also set to decrease from 3.8% to 2.6%.

The ECB notes that the slowdown is primarily due to the fading effect of large one-off payments made in 2024. It is expected that by the end of 2026, their influence will almost completely disappear, leading to more moderate growth in base wages.

Despite ongoing economic uncertainty, the regulator has not yet recorded increased wage pressure in new collective agreements. The bank emphasizes that the index is not a full forecast but rather reflects data from existing labor contracts.