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Eurozone Wage Growth Halves Amid Low Unemployment
20 Feb
Summary
- Eurozone wage growth slowed to 2.83% in 2025 from 4.51% in 2024.
- Unemployment remained near record lows throughout 2025.
- Slowing wage growth suggests inflation will stay below 2% in 2026.
In 2025, wage growth across the Eurozone experienced a notable deceleration, settling at 2.83% for the year. This marks a substantial decrease from the 4.51% increase recorded in 2024. The slowdown occurred even as unemployment rates remained close to their record lows throughout the year.
This trend in wage moderation is interpreted by economists as an indication that inflation is expected to stay below the European Central Bank's (ECB) 2% target in 2026. While households were able to recover some real spending power in 2025 due to wages rising faster than inflation, future wage increases are projected to be more in line with inflation rates.
Concerns exist regarding the potential impact of technologies like artificial intelligence on job security and wage growth. However, initial research suggests these technologies have primarily boosted productivity, with limited evidence of widespread job displacement thus far. Nevertheless, experts caution that labor-displacing effects could emerge as AI capabilities advance.
