ECB: Deceptive wage hopes

ECB Wage Tracker slightly drifting upwards

One of the ECB's reasons for expecting falling inflation rates is that its experimental wage tracker signals a significantly weaker rise in wages for the second half of the year. For a long time, this was only shown as a chart in presentations by some Council members, but since December it has been published on the ECB's Data Portal. The data is updated on the Wednesday after each monetary policy meeting.

In our Economic Insight “The ECB's wage mirage” , we pointed out the risk that the Wage Tracker underestimates the rise in wages. This is because it only takes into account collective wage agreements that have already been concluded for the coming months. However, collective agreements that are currently being negotiated and may include significant wage increases are not taken into account. As a result, the latest Wage Tracker is regularly higher than the previous one. The difference between the Wage Tracker based on the data from December 18 and January 30 is only quite small because hardly any new wage agreements were concluded around Christmas and New Year. However, a number of collective bargaining rounds are likely to be concluded in the coming weeks - in which the trade unions are still demanding wage increases, some of which are quite substantial.

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