Wage growth in Germany slowed sharply as economy fails to grow

The Bundesbank monthly report showed a significant slowdown in wage growth in Germany in the first quarter of this year. At the same time, the Bloomberg agency notes that the weakness of the country's economy suggests a further decline of the indicator in the future.

Overall, for the first three months of 2025, negotiated payments in Germany, including ancillary agreements, grew by only 0.9% year-on-year. By comparison, at the end of 2024, the growth rate was 5.8%.

As central bank officials added, the sharp slowdown was due to the end of tax exemption on extra bonuses. Excluding those payments, wages rose 6.7% in the first three months of the year.

The data from Germany may be encouraging for the European Central Bank (ECB), which closely monitors wage growth in the region to gauge the eurozone's success in curbing inflation.

Europe's wage growth figures have been gradually slowing in recent months as consumer price growth approaches the ECB's 2% target. The regulator's officials cite this trend as one of the main reasons for further interest rate cuts.

New data on wages in the eurozone is to be published this Friday.