By Pawel Adrjan, Reamonn Lydon and Vahagn Galstyan
Key Points:
- Posted wages grew 3.3% in the euro area, 6.1% in the UK and 3.1% in the US in 2024, according to December data from the Indeed Wage Tracker.
- Within the euro area, annual wage growth varied significantly, ranging from 1.8% in France to 6.1% in the Netherlands.
- Projections based on real-time advertised wage data and collective bargaining agreements forecast a slowdown in official Compensation per Employee growth in the five largest euro area countries, from 4.4% in Q3 to 4.1% in Q4 of 2024, close to the European Central Bank’s projection of 4.2% for Q4 2024.
Full-year 2024 data from the Indeed Wage Tracker shows the pace of wage growth is at or near levels consistent with 2% inflation targets in the US and euro area while remaining well above those levels in the UK. In the US, posted wage growth fluctuated in the low 3% range throughout 2024, a rate similar to the pre-pandemic period. In the euro area, posted wage growth gradually declined from the high 3% range at the start of the year to the low 3% range by year-end. Meanwhile, the UK has sustained a much higher rate of wage growth, despite a cooling labour market.
Spotlight: Wage Growth in the Euro Area
While the overall annual rate of euro-area posted wage growth was stable at around 3.3% in the final quarter of 2024, the aggregate figure masks significant variation between countries and industries. Annual wage growth slowed throughout much of the year in France (from 3.4% in January to 1.8% in December), Germany (from 3.8% in January to 2.8% in December) and the Netherlands (where annual growth peaked at 8.2% in June before falling to 6.1% in December). Italy experienced a mid-year pickup in wage growth after delayed collective bargaining agreements were updated, finishing the year at 2.9%. Ireland’s wage growth was generally steady for the year, ranging between a fairly high 4% and 5% and ending 2024 at 4.3%. And in Spain, posted wage growth accelerated throughout the year, reaching 5.0% in December, well above pre-pandemic levels of around 2%, likely boosted by resilient demand for new workers.
In real terms, adjusted for inflation, many euro area countries returned to pre-pandemic posted wage growth rates in 2024. But even though posted wages were growing faster by the end of 2024 than the annual rate of inflation in most countries analyzed, most countries have still experienced notable real wage declines over the longer term, reflecting an incomplete recovery in purchasing power. This longer-term trend is different than trends in both the UK and US, where real posted wages have risen since 2019 despite long periods of high inflation. Worker and union demands for a real wage catch-up are likely one reason why nominal wages are still growing strongly in several euro area countries.