Euro area wage growth is set to moderate after a peak in 2024, as indicated by the European Central Bank (ECB) wage tracker updated with September data.
- Euro area wage growth is set to moderate after a peak in 2024, as indicated by the European Central Bank (ECB) wage tracker updated with September data.
The latest figures suggest that negotiated wage growth, including smoothed one-off payments, will reach 4.7 per cent in 2024 but fall to 3.2 per cent in 2025. This projection is based on coverage of 50.6 per cent of employees in participating countries for 2024, which is expected to decrease to 48.7 per cent in 2025.
Alternative assessments of the wage tracker present slightly differing results. The tracker that factors in unsmoothed one-off payments indicates a growth of 4.9 per cent in 2024, tapering to 3.0 per cent in 2025. In contrast, excluding these one-off payments suggests a growth rate of 4.2 per cent in 2024, with an increase to 3.9 per cent in 2025.
The ECB attributes the anticipated downward trend partly to the significant one-off payments in 2024 that will not recur in 2025, along with the frontloaded nature of wage increases in certain sectors.
Looking further ahead, the third quarter of 2026 presents a mixed outlook for wage growth indicators. The headline wage tracker, including smoothed one-off payments, indicates an increase to 2.2 per cent from 1.8 per cent recorded in the first half of 2026. Similarly, the tracker reflecting unsmoothed one-off payments also stands at 2.2 per cent, down from 2.5 per cent in the earlier period. The tracker excluding one-off payments shows a slight decline to 2.4 per cent from 2.6 per cent in the first half of the year.
Notably, employee coverage for the third quarter of 2026 has dropped significantly to 19.4 per cent, compared to 31.0 per cent in the first half of the year and 47.2 per cent in the fourth quarter of 2025.
In Cyprus, wage trends appear more stable, with the average gross monthly earnings reported to be €2,476 in the second quarter of 2025. This figure reflects a 4.2 per cent increase from the previous year and continues the upward trajectory that began in 2024, where the average monthly salary was €2,483. However, wage disparities remain evident, particularly when considering the median wage of €1,881 in 2024, which is significantly lower than the average.
The data also highlights ongoing issues with the gender pay gap, as men earned an average of €2,656 while women earned €2,251 in 2025. Interestingly, the year-on-year increase was greater for women, at 4.7 per cent, compared to 3.8 per cent for men, suggesting a gradual narrowing of the gap.
Income distribution statistics reveal that 40 per cent of employees in Cyprus earn between €1,500 and €2,999, while 36.1 per cent earn less than €1,500. Only 5.1 per cent of the workforce earns €6,000 or more, according to Cystat. The data further indicates that non-Cypriot nationals frequently occupy both lower and higher pay brackets, with 48.7 per cent earning less than €1,500 and 7.7 per cent earning €6,000 or more.
In terms of sector-specific growth, Cystat reported the strongest salary increases in the Information and Communication sector, which saw an 8.1 per cent rise in 2024. The financial and insurance activities sector recorded the highest average earnings at €4,710.
