Annual growth in labour costs in the euro area was 3.4%

In the first quarter of 2025, average hourly labour costs for employers in the euro area rose by 3.4% year-on-year. In the EU as a whole, the figure reached 4.1 per cent, according to fresh Eurostat data. The dynamics reflected both wage growth and an increase in other employer costs (contributions, taxes, etc.), which also rose by 3.4 per cent in the eurozone and 3.8 per cent in the EU.

Among economic sectors, the most significant cost growth was observed in construction: +4.7% in the eurozone and +5.2% in the EU. This was followed by services (+4.3% and +4.7% respectively). But the so-called "non-business" economy (healthcare, education, public sector) showed a more modest growth: only +2.5% in the eurozone and +3.4% in the EU. This may indicate a cautious fiscal policy in the public sector or its lagging behind the private market.

In terms of individual types of economic activities, the highest growth of expenditures was recorded in professional, scientific and technical spheres - by 7.4% in terms of wages and salaries and 6.2% in terms of other expenditures. The real estate sector was not far behind: +6.1% and +6.0% respectively. This jump can be attributed to the high demand for highly specialised staff and competition for talented employees.

In the EU, the leaders in labour costs growth were Romania (+16.1%), Croatia (+13.5%) and Bulgaria (+13%). The reasons are the catch-up effect in the economy, inflationary pressures and wage growth in an effort to reduce labour outflow. Poland and Hungary also posted double-digit gains (+11.2% and +10.2% respectively).

At the other end of the scale are France (+1.9%) and Malta (+1.6%), where growth was minimal. This could be due to a slowdown in economic activity, measures to curb inflation or structural constraints in the labour market.

The general rise in labour costs may put pressure on business margins, especially in labour-intensive sectors. However, it also reflects the ongoing recovery of the European labour market and the strengthening of the position of workers. For high-growth countries, this trend is an indicator of economic transformation and attempts to close the gap with the "expensive" western EU countries.