The European Central Bank (ECB) has reported that negotiated wage pressures across the euro area remain stable through 2026 and into early 2027, while separate data from Cyprus showed workers’ earnings continued to rise in the first quarter of the year, although the majority of employees still earned well below the national average.

The ECB’s latest wage tracker, updated with collective bargaining agreements signed up to the first week of July 2026, showed negotiated wage pressures with smoothed one-off payments at 2.3 per cent for 2026, based on agreements covering 44.3 per cent of employees in participating countries, rising slightly to 2.7 per cent in the first quarter of 2027, when coverage currently stands at 28.4 per cent.

The central bank also extended the tracker’s forward-looking horizon to March 2027, adding that the September 2026 update will extend coverage further into the second quarter of 2027 as additional wage agreements are concluded.

Compared with the June 2026 release, the ECB said the latest data left its assessment of negotiated wage pressures largely unchanged, indicating that newly signed agreements have not materially altered the outlook for this year.

The ECB stressed that the wage tracker should not be interpreted as a forecast, since it only reflects active collective bargaining agreements currently available and remains subject to revision as new agreements are signed.

Moreover, the institution said the tracker does not precisely replicate its negotiated wage growth indicator, meaning differences between the two measures should be expected over time.

For a broader assessment of labour costs, the ECB pointed to the June 2026 Eurosystem staff macroeconomic projections, which forecast compensation per employee across the euro area to increase by 3.2 per cent during 2026.

The headline wage tracker, which smooths one-off payments such as inflation compensation, bonuses and backdated pay over a 12-month period, averaged 1.8 per cent in the first quarter of 2026, 2.1 per cent in the second quarter and 2.6 per cent in both the third and fourth quarters.

According to the ECB, this gradual increase mainly reflects the fading statistical impact of large one-off payments made in 2024 but not repeated in 2025, with that mechanical effect almost disappearing during the second half of 2026.

By the first quarter of 2027, the headline indicator reaches 2.7 per cent, suggesting negotiated wage pressures remain broadly stable at the turn of the year while one-off payments play only a limited role.

Meanwhile, the wage tracker using unsmoothed one-off payments showed negotiated wage growth of 2.6 per cent in 2026 and 2.7 per cent in the first quarter of 2027.

That measure averaged 2.9 per cent in the first quarter of 2026, easing to 2.6 per cent in the second quarter and 2.5 per cent in both the third and fourth quarters.

The ECB’s measure excluding one-off payments, which reflects permanent negotiated wage increases, remained broadly stable at around 2.6 per cent throughout 2026 before rising slightly to 2.7 per cent in the opening quarter of 2027.

Employee coverage stood at 47.0 per cent in the first quarter of 2026, 45.7 per cent in the second quarter, 42.5 per cent in the third quarter and 42.0 per cent in the fourth quarter before falling to 28.4 per cent in the first quarter of 2027, reflecting the more limited availability of agreements further into the future.

The ECB explained that its four wage indicators serve different purposes.

While the headline tracker smooths temporary payments and the measure excluding one-off payments captures structural wage increases, the unsmoothed series follows annual negotiated wage movements more closely, and the employee coverage indicator shows how representative the available agreements are across participating countries.

Against that broader European backdrop, Cyprus also recorded continued wage growth, according to provisional figures released by Cystat on Wednesday.

The statistical service reported that average gross monthly earnings increased to €2,601 in the first quarter of 2026, compared with €2,508 in the same period of 2025, representing an annual increase of 3.7 per cent.

However, Cystat’s figures also underline that the average salary is not representative of what most employees actually earn, since relatively high incomes lift the overall average while the largest share of workers receive considerably less.

Indeed, 40.9 per cent of employees earned between €1,500 and €2,999 per month, making this the largest salary group, while 33.9 per cent earned less than €1,500.

Another 13.1 per cent received between €3,000 and €4,499, 6.4 per cent earned between €4,500 and €5,999, and 5.7 per cent received €6,000 or more each month.

After seasonal adjustment, average gross monthly earnings reached €2,652 during the first quarter, representing a quarterly increase of 0.8 per cent compared with the fourth quarter of 2025.

The unadjusted average fell from €2,932 in the previous quarter because year-end bonuses and other additional payments typically inflate earnings during the final months of the year.

Average gross monthly earnings reached €2,776 for men and €2,378 for women during the first quarter.

Compared with a year earlier, men’s earnings increased by 3.3 per cent, while women’s earnings rose by 4.2 per cent.

On a seasonally adjusted basis, earnings stood at €2,823 for men and €2,434 for women, with quarterly increases of 0.7 per cent and 1.0 per cent respectively.

Cystat also highlighted differences by nationality, with 45.2 per cent of Cypriot employees earning between €1,500 and €2,999, while 27.4 per cent earned below €1,500.

Among non-Cypriot employees, 46.7 per cent earned less than €1,500, while 32.6 per cent received between €1,500 and €2,999.

At the top end of the income scale, however, 8.5 per cent of non-Cypriot employees earned €6,000 or more, compared with 4.3 per cent of Cypriot employees, indicating that foreign workers are more heavily represented at both the lowest and highest ends of the earnings distribution.

Among men, 31.1 per cent earned less than €1,500, 42.3 per cent received between €1,500 and €2,999, 13.1 per cent earned €3,000 to €4,499, 6.3 per cent received €4,500 to €5,999, and 7.2 per cent earned at least €6,000 per month.

For women, 37.4 per cent earned below €1,500, 39.2 per cent received €1,500 to €2,999, 13.1 per cent earned €3,000 to €4,499, 6.5 per cent received €4,500 to €5,999, and 3.8 per cent earned €6,000 or more.

The nationality breakdown further showed that 44.5 per cent of non-Cypriot men and 50.3 per cent of non-Cypriot women earned less than €1,500, compared with 22.9 per cent and 32.3 per cent respectively among Cypriot men and women.

At the upper end of the pay scale, 10.3 per cent of non-Cypriot men earned at least €6,000, compared with 5.3 per cent of Cypriot men, while 5.5 per cent of non-Cypriot women earned at least €6,000, against 3.1 per cent of Cypriot women.