Wage increases will likely be less significant in new collective labor agreements

Wages negotiated in collective bargaining agreements are unlikely to continue to rise as rapidly as in the past two years, according to AWVN, the key advisor on employment conditions at Dutch employers. The organization said that wage agreements concluded in March amounted to an average pay raise of 5.3 percent.

A total of 22 collective labor agreements were concluded in March, covering approximately 210,000 employees. In January, the average wage increase agreed in collective agreements was 5.9 percent. There was a small revival in February, with 6.4 percent increase.

Overall, these are signs of a downward trend, according to AWVN. In the first quarter of 2024, the average pay raise for collective agreements was measured at 5.9 percent. Just a few months earlier, there was growth of 8 percent, the largest average wage increase in recent years.

Still, at 5.9 percent, the average pay raise is still overall much higher than in the past 40 years.

AWVN's figures are closely monitored by De Nederlandsche Bank (DNB). The country's central bank is keen to ensure that wages do not continue to rise too sharply. If that happens, there is a risk that it will further fuel inflation by triggering a wage-price spiral.

But the chance of this is now small, the DNB recently stated after a study. The central bank said it is necessary to continue to closely monitor wage developments.

"Many new collective agreements still take into account previous increases in inflation. That is, the pass-through from the inflation peak to wage growth has not yet been completed," the central bank noted.