Euro Area Labour Cost Growth Eases to 3.2% in the First Quarter, Eurostat Reports
Euro area hourly labour costs rose by 3.2% year on year in the first quarter of 2026, according to data published on 16 June 2026 by Eurostat, the statistical office of the European Union. The increase eased from 3.4% in the fourth quarter of 2025. Across the wider European Union, hourly labour costs grew by 3.6% over the same period.
The figures land at a moment of close attention to wage dynamics, which feed into services inflation and remain a focal point for assessments of the pace of disinflation in the region.
Components of labour costs
Labour costs comprise two main components, wages and salaries and non wage costs. In the euro area, the cost of hourly wages and salaries increased by 3.4%, while non wage costs rose by 2.9%. In the European Union, wages and salaries advanced by 3.7% and the non wage component increased by 3.2%.
Breakdown by economic activity
Within the euro area, hourly labour costs rose by 3.3% in industry, 4.1% in construction and 3.1% in services. The corresponding European Union figures were 3.6% in industry, 4.2% in construction and 3.4% in services. Construction recorded the firmest cost growth in both the euro area and the wider Union.
Divergence across member states
The release also showed wide dispersion among individual economies. The highest annual increases in hourly wage costs for the whole economy were recorded in Hungary at 16.4%, Bulgaria at 13.2% and Croatia at 9.2%. The lowest increases were registered in Malta at 1.3%, France at 1.8%, and in Denmark and Latvia at 2.5% each.
Market context
Analysts and market commentators have noted that a continued moderation in labour cost growth could support the case for further European Central Bank policy easing. That interpretation reflects market commentary rather than any assessment by Eurostat, whose release reports the statistics without policy conclusions. Eurostat noted that labour cost data are subject to revision, particularly for the most recent quarters as new source data become available.
Sources: Eurostat.
