Wages in Ireland were 4.3 per cent higher in June compared with the same month last year, a study has found.
Despite the increase, wage growth was still below its peak in August 2022 when wage growth reached 6.4 per cent, driven by a surge in inflation that year following Russia’s invasion of Ukraine. It remains higher than the pre-pandemic average of 2.5 per cent in 2019.
The study from Indeed and the Central Bank of Ireland shows that growth in wages had been between 4 per cent and 4.1 per cent since the start of this year.
The decline in growth since August 2022 is in line with the slowdown in wage growth in most large euro-area countries and is set remain that way in the near term, the report says.
Data was taken from France, Germany, Italy, the Netherlands and Spain for the European aspect of this survey.
Commenting on the data findings, Indeed economist Pawel Adrjan said: “The fact that wage growth remains above its pre-pandemic norms is a concern for some ECB policymakers, as they worry that high wage growth across the euro area may drive continued persistence in inflation in the service sector, where labour accounts for a high share of firms’ costs.
“From a jobseeker perspective, relatively high nominal wage growth means that posted wages have now been growing faster than CPI [consumer price inflation] in Ireland for five consecutive months, helping regain some of the losses in purchasing power incurred in the past two years,” he added.
According to the study, wages grew at a rate of 3.1 per cent in the United States, 7 per cent in the UK and 3.7 per cent in the euro area in June 2024.
Annual euro area wage growth was down from the post-pandemic peak of 5.4 per cent but marginally up from 3.5 per cent in March, April and May this year.
Projections from the group for the second quarter of 2024 for the euro area range from 4.3 per cent to 5 per cent.
The European Central Bank expects wage growth to slow to 4.7 per cent in the third quarter and 4.5 per cent in the last three months of the year, partly on the basis of forward-looking information in its negotiated wage tracker.
The study showed a gradual easing of wage growth in the euro area in 2023 followed by a general levelling off of wages in the second quarter of this year.
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