ECB Sees No Significant Wage Response to Energy-Driven Inflation
The European Central Bank (ECB) is not observing significant wage pressures in response to this year's energy-driven inflation surge, according to its chief economist Philip Lane. Speaking at a university lecture in Switzerland, Lane attributed the restraint on wage growth to firms' concerns about global competition, particularly from China, and the potential use of AI robots.
Lane emphasized that euro-area wages are not responding strongly to the recent energy shock. He highlighted that companies are warning workers that they risk being outcompeted by foreign rivals if they demand higher wages. This fear is compounded by the threat of automation, with firms stating that they have AI robots ready to take over.
The ECB's projections show wage growth easing to around 3.3% in 2026 and stabilizing at that level through 2027 and 2028, supported by slowing inflation and resilient productivity. Forward-looking indicators, such as the ECB's wage tracker, suggest negotiated wage pressures continue to ease, pointing to modest wage growth in 2026-27 and limited risk of a strong wage-inflation spiral.