ECB forecasts acceleration in negotiated wage growth in the euro area in early 2027

ECB updates its wage growth indicator

The European Central Bank on Wednesday published updated data from its negotiated wages indicator, showing that collectively agreed wage growth in the euro area over the first nine months of 2027 will be slightly higher than in 2026. The base indicator, which smooths one-off payments over 12 months, shows 2.3% for the whole of 2026 based on agreements covering 46.2% of employees, 2.7% in the second half of 2026 and 2.8% in the first half of 2027, followed by a decline to 2.4% in the third quarter of 2027 based on preliminary agreement coverage.

Revision and structural assessments

Compared with the September release, the base indicator has been revised up by roughly 0.1 percentage points on average for both the second half of 2026 and the first half of 2027. Excluding one-off payments, the ECB estimates structural negotiated wage growth to average 2.8% over the first three quarters of 2027, versus 2.6% for the whole of 2026. The indicator without smoothing of one-off payments holds at 2.7% in 2026 and in the first half of 2027, then falls to 2.4% in the third quarter of 2027. The bank attributes the subdued figures for early 2026 to a statistical effect from the disappearance of unpaid, non-repeated one-off payments from 2024; this effect fades in the second half of the current year.

Limitation of the forecast

A significant caveat concerns data coverage: the share of employees covered by already signed agreements declines from 46.2% in 2026 to 31.8% in the first half of 2027 and 23.3% in the third quarter of 2027. This means the forecast figures will be refined as new agreements are concluded. The ECB indicator was developed jointly with nine national central banks to assess labour cost dynamics and inflationary pressure in the currency union.