The Austrian National Bank (OeNB) expects a slow decline in collective wage growth by the end of the year. “Wage dynamics in 2024 will therefore remain higher than in the euro area. Only from 2025 onwards will there be an accelerated decline in wage growth. Wage growth in the public sector will remain higher than in the private sector until the end of the year,” say the bankers. They refer to their new “OeNB Wage Tracker” as an indicator of the development of collective wages.
The “OeNB Wage Tracker” is a reaction to the sharp rise in inflation in the eurozone and the associated fear of a price/wage spiral. The data now collected would suggest that wage growth in the eurozone has increased. “At just under five percent, this increase is currently higher than the historical average, but is moderate compared to the previous rise in inflation,” the OeNB said in a press release.
The bankers’ assessment of the course of the domestic collective bargaining negotiations is interesting: “The wage development in Austria is an exception, since in this country the development of the collectively agreed minimum wages and salaries is de facto indexed to inflation.” Although there is no legal obligation in Austria to adjust the collectively agreed wages to inflation, as is the case in Belgium, “it is usual in the Austrian collective bargaining negotiations for the collectively agreed wage increase to at least match the inflation in the previous year,” the OeNB noted.
According to the “OeNB Wage Tracker”, the growth of Austrian collective wages is currently 8.5 percent, significantly higher than in the euro area as a whole. “Collective wage growth peaked at around 9 percent in early 2024 and will slowly decline to around 8 percent by the end of the year. This projection is relatively reliable because the underlying collective agreement coverage remains high (over 80 percent) until the end of the year,” the National Bank calculates.
And so it continues: From the beginning of 2025, there will be a sharp decline in collective wage growth. At the same time, however, the level of collective agreement coverage will also decrease sharply. This is because a particularly large number of agreements will come into force in January, the wage increases for which are currently unknown.
While the growth in collective wage agreements in the private sector is declining over the course of this year, the increase in salaries in the public sector will remain high until the end of the year. “This is mainly due to a high level of wages for public employees (plus 9.3 percent from January 2024),” according to the National Bank. In contrast, wages in the private sector were in some cases lower, such as those for metal workers (8.5 percent) and commercial employees (8.4 percent).
The wage increases in the construction industry and the hotel and catering industry only came into effect in May and were also lower at 7.1 percent and 7.25 percent respectively due to the fall in rolling inflation. “This will lead to significantly higher collective wage growth in the public sector than in the private sector in 2024,” the bankers point out.
