Germany helps drive rise in eurozone wages

Wages in the eurozone recorded a healthy rise in the first quarter of the year, in a welcome boost for the bloc’s workers.

Despite spending the last four months in consumer price deflation, hourly labour costs in the eurozone rose by 1.7 per cent in the first quarter of 2016, its sharpest pace since the end of 2014, according to Eurostat.

Labour costs were driven higher by wages and salaries which rose 1.8 per cent in the three months to March, compared to the same quarter in 2015.

The euro’s newest members – Estonia, Lithuania and Latvia – saw the biggest quarterly rises, while Germany also saw a robust 3.2 per cent growth in labour costs. Italy however saw hourly wages shrink by 2 per cent – the sharpest in the 19-country bloc.

Salaries saw the biggest jump in the eurozone’s industrial sector, where they rose 2 per cent, followed by services (1.7 per cent) and the non-business economy (1.6 per cent).

The numbers should provide encouragement to the European Central Bank that depressed oil prices and “lowflation” is not having “a serious negative second round effect on pay growth”, said Howard Archer at IHS.