The European Central Bank (ECB) has published its latest wage tracker data showing that negotiated wage growth in the euro area is set to moderate in 2026, signalling easing pay pressures across the bloc.

The headline ECB wage tracker, which covers active collective bargaining agreements and smooths one-off payments over time, indicates negotiated wage growth of 3.2 per cent in 2025, based on a coverage of 49.9 per cent of employees in participating countries, and 2.4 per cent in 2026, based on a coverage of 33.1 per cent.

Compared with the December 2025 data release, the 2026 figure has been revised up by 0.1 percentage points.

The ECB wage tracker with unsmoothed one-off payments shows negotiated wage growth of 3.0 per cent in 2025 and 2.7 per cent in 2026.

Meanwhile, the measure excluding one-off payments indicates an easing of negotiated wage growth from 3.9 per cent in 2025 to 2.7 per cent in 2026, with the latter revised up by 0.1 percentage points.

The ECB explained that the headline tracker is better suited to describing quarterly or monthly dynamics in negotiated wages because it spreads one-off payments over time, while the unsmoothed version is more appropriate for annual comparisons as it avoids double smoothing of one-off payments.

For 2026, the headline tracker stands at 2.1 per cent in the first half of the year and 2.7 per cent in the second half.

The rise in the wage path during the year reflects the dissipation of the mechanical downward effect caused by large one-off payments made in 2024 but not repeated in 2025.

These mechanical effects are expected to virtually disappear over the course of 2026, leading to a convergence between the trackers with one-off payments and the measure excluding them as such payments become less relevant.

The ECB wage tracker also suggests reduced dispersion in negotiated wage pressures across euro area countries in 2026 compared with previous years.

The unsmoothed measure points to a more stable and less volatile outlook for 2026, with 2.9 per cent growth in the first half of the year and 2.6 per cent in the second half.

The tracker excluding one-off payments stands at 2.7 per cent for both halves of 2026, indicating more moderate dynamics in negotiated base wages than in recent years.

Employee coverage for 2026 is estimated at 37.1 per cent for the first half and 29.2 per cent for the second half.

The forward-looking horizon of the wage tracker remains December 2026, although it is expected to be extended to the first quarter of 2027 in the July 2026 data release as new agreements are signed and contract coverage expands.

The ECB cautioned that the wage tracker may be subject to revisions and that its forward-looking component should not be interpreted as a forecast, as it only reflects information currently available from active collective bargaining agreements.

It also stressed that the tracker does not perfectly replicate the official indicator of negotiated wage growth and that deviations may occur over time.

For a broader view of wage developments, the December 2025 Eurosystem staff macroeconomic projections point to annual growth in compensation per employee of 4.0 per cent in 2025 and 3.2 per cent in 2026.

Against this euro area backdrop, recent data from Cyprus show continued wage growth at the national level.

According to the Cyprus Statistical Service (Cystat), average monthly earnings in Cyprus rose by 4.3 per cent year-on-year in the third quarter of 2025.

Average gross monthly earnings reached €2,452 between July and September 2025, up from €2,352 in the corresponding quarter of 2024.

Seasonally adjusted data indicate a further quarterly increase of 0.7 per cent compared with the second quarter of 2025, pointing to a continued upward trend.

Cystat stated that all data from the first quarter of 2025 onwards remain provisional and subject to revision.

Male employees earned an average gross monthly salary of €2,622 in the third quarter of 2025, while female employees earned €2,238.

On a year-on-year basis, earnings increased by 3.8 per cent for men and 4.9 per cent for women.

Seasonally adjusted figures show a quarterly rise of 0.3 per cent for men and 1.2 per cent for women.

Despite the overall increase, income disparities remain evident across the labour market.

In total, 36.5 per cent of employees earned less than €1,500 per month, while 39.7 per cent fell within the €1,500 to €2,999 bracket.

A further 12.7 per cent earned between €3,000 and €4,499, 6 per cent earned between €4,500 and €5,999, and 5 per cent earned €6,000 or more.

Among Cypriot employees, 43.9 per cent were concentrated in the €1,500 to €2,999 range, while 30.2 per cent earned less than €1,500.

Smaller shares of Cypriots earned between €3,000 and €4,499 at 15.5 per cent, between €4,500 and €5,999 at 6.7 per cent, and €6,000 or above at 3.8 per cent.

By contrast, 49.1 per cent of non-Cypriot employees earned less than €1,500, while 31.5 per cent were in the €1,500 to €2,999 bracket.

At the upper end, 7.6 per cent of non-Cypriots earned €6,000 or more, compared with 7.1 per cent earning between €3,000 and €4,499 and 4.7 per cent earning between €4,500 and €5,999.

Among men, 41.3 per cent earned between €1,500 and €2,999 and 33.3 per cent earned less than €1,500.

Higher income brackets for men accounted for 12.8 per cent in the €3,000 to €4,499 range, 6.1 per cent in the €4,500 to €5,999 range, and 6.5 per cent at €6,000 or more.

Among women, 40.5 per cent earned less than €1,500, while 37.8 per cent earned between €1,500 and €2,999.

A further 12.5 per cent of women earned between €3,000 and €4,499, 6 per cent between €4,500 and €5,999, and 3.2 per cent earned €6,000 or more.

Cystat clarified that the calculations are based on data from the Social Insurance Services and cover all employees except those working for private households or extraterritorial organisations.

Earnings include basic salary, cost of living allowance, overtime, holiday fund payments, bonuses and other allowances paid during the reference period.

Irregular employment cases, such as employees who worked limited hours or received arrears only, are excluded from the data.

Temporary wage deductions and contributions applied during earlier fiscal adjustment periods do not affect the gross earnings figures, which reflect total remuneration before deductions.