A research undertaken by Indeed and the Central Bank of Ireland reveals that June’s wages were 4.3 per cent more than those of the same month in the previous year. This growth was still less than its August 2022 high of 6.4 per cent, which was fuelled by the inflation spike post Russia’s attack on Ukraine. However, the current wage increase still surpasses the 2019 pre-pandemic average hike of 2.5 per cent.
From the beginning of the current year, wage growth has consistently ranged between 4 per cent and 4.1 per cent. This deceleration since August 2022 is consistent with wage growth trends in the majority of prominent Eurozone countries, with expectations that this will continue in the foreseeable future, according to the report.
Data collected from France, Germany, Italy, the Netherlands, and Spain was used to gain a Eurozone perspective for this study.
Indeed economist, Pawel Adrjan, elucidated on the results, highlighting concerns of some European Central Bank (ECB) policymakers that high wage growth in the euro area could lead to further inflation, particularly in the service sector where labour makes up a significant percentage of company expenses.
From a job hunter’s point of view, Adrjan added, the above-average nominal wage growth indicates that wages have been rising more quickly than the Consumer Price Index (CPI) in Ireland for five straight months. This has assisted in offsetting some of the decline in purchasing power experienced in the last two years.
The study also highlighted that wage growth rates in June 2024 were 3.1 per cent in the USA, 7 per cent in the UK and 3.7 per cent in the Eurozone. Annual Eurozone wage growth has decreased from the post-pandemic peak of 5.4 per cent but is slightly up from 3.5 per cent seen in March, April, and May of this year.
Future estimates for the Eurozone’s second quarter of 2024 ranged between 4.3 per cent and 5 per cent. Meanwhile, the ECB anticipates wage growth to dip to 4.7 per cent in the third quarter, followed by 4.5 per cent in the year’s final three months, based partly on forward-looking data from its negotiated wage tracker.
The research revealed a progressive moderation in salary increase throughout the euro zone in 2023, preceding a comprehensive stabilisation of earnings in this year’s second quarter.