ECB wage tracker indicates normalisation of pay growth by 2026
The European Central Bank's updated wage tracker indicates that negotiated wage growth will level off below 3.0 percent by the end of 2026. This assessment is based on collective bargaining agreements signed up to mid-January 2026.
Wage growth moderates across indicators
The ECB's wage tracker, covering active collective bargaining agreements, indicates negotiated wage growth with smoothed one-off payments of 3.2 percent in 2025 and 2.4 percent in 2026. This 2026 figure was revised up by 0.1 percentage points from the December 2025 data release.
The tracker with unsmoothed one-off payments shows growth of 3.0 percent in 2025 and 2.7 percent in 2026. Excluding one-off payments, negotiated wage growth is projected to ease from 3.9 percent in 2025 to 2.7 percent in 2026, also revised up by 0.1 percentage points for 2026. For 2026, the headline ECB wage tracker stands at 2.1 percent in the first half of the year and 2.7 percent in the second half.
This increase over the year is related to the dissipation of mechanical downward effects from large one-off payments made in 2024 but not in 2025. These mechanical effects are expected to virtually disappear, leading to a convergence of the various wage tracker measures.
Understanding the wage signals
The ECB's headline wage tracker is designed for quarterly or monthly dynamics by smoothing one-off payments, while the unsmoothed version is better for yearly dynamics.
The data also suggests less dispersion in negotiated wage pressures across euro area countries in 2026 compared to previous years.
The forward-looking horizon of the tracker remains unchanged at December 2026, with an extension to the first quarter of 2027 planned for the July 2026 data release.
The ECB cautions that this forward-looking component should not be interpreted as a forecast, as it only captures currently available information and is subject to revisions.
For a broader view, the December 2025 Eurosystem staff macroeconomic projections indicate compensation per employee growth of 4.0 percent in 2025 and 3.2 percent in 2026.
A cautious path to wage stability
The updated wage tracker offers a nuanced picture of euro area pay dynamics, suggesting a gradual normalisation.
While the overall trend points to moderating pressures, the slight upward revisions for 2026 indicate persistent wage stickiness.
The inherent limitations of the forward-looking component necessitate a cautious interpretation of these signals.