ECB Wage Data: Euro Area Compensation per Employee Still High in 2Q24

6 September 2024

By Isabel Teles – FRANKFURT (Econostream) – A key measure of wages for the European Central Bank, compensation per employee, rose slightly in the euro area in the second quarter of 2024, reaching its all-time highest level, according to the ECB data portal’s latest update on Friday.

The new data showed that the indicator increased to 127.45 in 2Q24 from 126.92 in 1Q24.

Two weeks ago, the ECB wage tracker showed negotiated wage growth in the euro area moving in the opposite direction, having fallen to 3.55% in 2Q24, the lowest level since 1Q23.

ECB policymakers put a lot of weigh on wage developments when deciding the monetary policy stance.

ECB Executive Board member Piero Cipollone recently argued that wage increases were normal and positive for the economic recovery.

‘We shouldn’t be afraid of wages increasing faster than inflation for a while, having risen at a slower pace previously’, he said. ‘Otherwise, I don’t see how we can sustain the recovery and, in turn, the rebound in productivity. We are not seeing a wage-price spiral. It’s a natural catching-up that is healthy for the economy.’

Speaking at research event last week, ECB Chief Economist Philip Lane said that the wage catch-up process was peaking now and was ‘going to move quite significantly next year and the year after to a much lower rate of wage increase.’

‘And this is where the confidence in returning to target comes from’, he added.