After the sharp erosion of purchasing power during the inflation surge of 2022, real wages in much of Europe have largely stabilised. Data cited by the European Central Bank shows that nominal wage growth has outpaced price increases, bringing eurozone real wages close to pre-inflation levels seen in late 2021.
While comprehensive cross-country wage reports for 2025 are still pending from organisations such as the OECD, new survey-based projections point to continued improvement in 2026.
According to the Employment Conditions Abroad (ECA) 2025–26 Salary Trends report, real salaries rose in nearly all European countries during 2025, a trend expected to continue into next year. By the end of 2025, real wage growth is forecast in 23 of the 25 countries surveyed, with declines limited to Romania and Ukraine.
Growth in 2025 ranged from modest gains of around 0.2% in Austria to more pronounced increases of over 5% in Turkey, reflecting wide disparities across the region.
Turkey and Eastern Europe set to outperform
Turkey is projected to record the strongest real salary growth in both 2025 and 2026. A sharp nominal wage increase combined with easing inflation is expected to lift real wages by 8.1% in 2026, extending gains from the previous year.
“Turkey stands out from other European countries because both salary increases and inflation remain significantly higher,” Steven Kilfedder, head of product analytics at ECA, said. He cautioned, however, that years of elevated inflation have already eroded household purchasing power, meaning recent gains only partially offset earlier losses.
Several Eastern European economies are also forecast to outperform the regional average. Hungary, Poland, Czechia and Bulgaria are expected to post among the highest real wage growth rates in 2026, supported by stronger economic momentum and productivity gains.
“Eastern European economies are once again expected to outperform Western peers, benefiting from faster growth and higher productivity,” the report noted.
Major economies trail the regional average
Among Europe’s largest economies, France is projected to lead real wage growth in 2026, followed by Germany, Italy and the United Kingdom. However, all four are expected to remain below the regional average.
The UK is forecast to post the weakest real wage growth among major economies at around 1.1%, despite relatively strong nominal pay increases. Analysts point to higher inflation expectations as a key factor limiting gains in purchasing power.
“While the UK is expected to see some of the largest headline salary rises, those gains are likely to be partly offset by higher inflation than in peer countries,” Kilfedder said.
Spain and the Netherlands are also expected to lag behind the European average, with employers remaining cautious about long-term pay commitments amid weak productivity growth and tighter fiscal conditions.
Moderate improvement expected in 2026
Across the 25 countries surveyed, ECA projects median real salary growth of 1.7% in 2026, up from 1.4% in 2025. With the exception of Romania, all countries are expected to record positive real wage growth next year.
The findings are based on a survey of 200 multinational companies conducted between August and October 2025, combined with inflation projections from the International Monetary Fund’s World Economic Outlook published in October.
