Hold onto your hats, because the latest data from the European Central Bank (ECB) is signaling a shift in the wage landscape that could impact everyone from employees to policymakers. The ECB’s wage tracker suggests that wage growth is set to slow down, with a gradual normalization of negotiated wage pressures expected by 2026. But here’s where it gets interesting: this isn’t just about numbers—it’s about what these numbers mean for the economy, inflation, and your paycheck. Let’s dive into the details.
PRESS RELEASE
19 December 2025
The ECB has updated its wage tracker with the latest wage agreements signed up to the end of November 2025, and it’s extended its forward-looking horizon to the end of December 2026. The data reveals a trend toward easing negotiated wage growth, aligning with the insights shared after the October 2025 Governing Council meeting. But here’s the part most people miss: the tracker distinguishes between smoothed and unsmoothed one-off payments, which can significantly alter the interpretation of wage dynamics. For instance, the tracker with unsmoothed one-off payments shows wage growth at 3.0% in 2025 and 2.7% in 2026, while the smoothed version indicates 3.2% in 2025 and 2.3% in 2026. Why does this matter? Because one-off payments, like bonuses or inflation compensation, can skew the perception of long-term wage trends.
Controversial Interpretation Alert: Some economists argue that focusing solely on smoothed data might underplay the immediate financial relief these one-off payments provide to workers. What do you think? Should we prioritize long-term trends or acknowledge the short-term impact of these payments?
Breaking it down further, the wage tracker excluding one-off payments shows a more pronounced easing, from 3.9% in 2025 to 2.6% in 2026. This suggests that structural wage increases are moderating, which could be a sign of stabilizing economic conditions. For 2026, the quarterly breakdown of the headline ECB wage tracker shows a gradual rise from 2.0% in Q1 to 2.7% in Q4. This uptick is largely due to the fading effect of large one-off payments made in 2024, which weren’t repeated in 2025. Interestingly, the tracker also hints at reduced disparities in wage pressures across euro area countries in 2026 compared to previous years—a potential indicator of greater economic cohesion.
The unsmoothed wage tracker for 2026 (3.1% in Q1, 2.5% in Q2, 2.4% in Q3, and 2.7% in Q4) further underscores a more stable and less volatile wage growth outlook. Meanwhile, the tracker excluding one-off payments hovers around 2.5% to 2.7% throughout the year, reinforcing the narrative of moderate wage dynamics. However, it’s worth noting that employee coverage decreases over the year, from 36.9% in Q1 to 23.4% in Q4, which could limit the representativeness of these figures.
Since the last data release in November 2025, the ECB has expanded the tracker to include Finland’s collective agreements from January 2015 onward, and the forward-looking horizon now extends to the end of 2026. But here’s the catch: the tracker is subject to revisions, and its forward-looking component isn’t a forecast. It’s based solely on current collective bargaining agreements, meaning deviations are expected over time. For a fuller picture, the December 2025 Eurosystem staff macroeconomic projections estimate a 4.0% growth in compensation per employee in 2025 and 3.2% in 2026.
The ECB publishes four wage tracker indicators for nine participating euro area countries on its Data Portal. These indicators serve different purposes: the headline tracker smooths one-off payments over 12 months, making it ideal for quarterly or monthly analysis; the tracker excluding one-off payments highlights structural wage increases; the unsmoothed tracker provides a yearly perspective without double-counting one-off payments; and the employee coverage indicator shows the percentage of employees represented by the data.
Thought-Provoking Question: With employee coverage varying widely across countries and quarters, how reliable are these indicators for policymakers? Should we be looking at additional metrics to get a more accurate picture of wage pressures?
For a deeper dive, Chart 1 and Table 1 offer detailed insights into forward-looking signals and revisions. Table 2 breaks down employee coverage by country, revealing significant disparities—for example, Finland’s coverage remains high, while Spain’s drops sharply in 2026. These variations raise questions about the uniformity of wage trends across the euro area.
Final Food for Thought: As wage growth moderates and economic conditions stabilize, what does this mean for inflation, consumer spending, and overall economic recovery? Are we on the cusp of a new normal, or is this just a temporary pause? Share your thoughts in the comments—let’s spark a debate!
For media queries, contact Benoit Deeg at +491721683704.
Notes:
- The ECB wage tracker is a collaborative effort involving nine euro area national central banks, based on a granular database of collective bargaining agreements.
- Its methodology uses a double aggregation approach, first at the country level and then for the euro area, using time-varying weights based on total employee compensation.
- Forward-looking data is conditional on current information and subject to revisions, especially at the turn of the year when many agreements are signed or renewed.
- The findings in this release do not reflect the views of the ECB’s decision-making bodies.
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