The Eurozone has witnessed a substantial increase in labor costs in the first quarter of 2024, with a nominal rise of 5.1% compared to the previous year. According to Eurostat, this increase is fueled by a 5.3% hike in wage costs and a 4.5% rise in non-wage labor costs. The broader EU experienced a 5.5% increase in labor costs.

The European Central Bank (ECB) has indicated that a 3% wage growth aligns with medium-term price stability, assuming a 1% productivity growth. However, productivity remained stagnant in the first quarter, posing challenges for businesses.