ECB staff won't get wage catch-up bank predicts for euro zone

A view shows the placards of the political parties in front of the European Central Bank (ECB) building in Frankfurt

By Francesco Canepa

FRANKFURT (Reuters) -The European Central Bank may be predicting that wages in the euro zone will catch up with prices, but its staff will have no such luck as they face a loss in purchasing power for a third straight year, based on preliminary estimates seen by Reuters.

The ECB expects wages in the euro zone to grow faster than inflation in 2024 and 2025, regaining some of the ground lost in the past two years to runaway prices.

But that won't be the case for the ECB's own 4,500 employees.

A preliminary figure shared by the ECB with staff points to a 3.6% pay rise in January to compensate staff for an estimated 5.3% inflation rate this year, according to the central bank's latest projections, which put price growth at 4.3% in 2024.

Coming on the back of below-inflation rises in the past two years, this added up to an 8.4% loss in purchasing power for the euro zone's central bankers, according to calculations by ECB staff representatives.

"First we were told to be patient because inflation was to be temporary, then that there would be a salary catch-up," staff representative Carlos Bowles told Reuters. "None of these two promises materialised so far and this is severely damaging staff trust towards ECB's leadership."

An ECB spokesperson said the bank's "salary increases always contain a lag to smoothen the cycle...due to the method by which they are calculated".

ECB wages track those of the 20 national central banks of the euro zone, the European Commission, the European Investment Bank and the Bank for International Settlements. The spokesperson said the ECB is "in the middle of reviewing this method".

The IPSO trade union has questioned that system and is planning to take the central bank to court over last year's rise.

The ECB initially underestimated a jump in inflation and later focused its public communication on wages rather than profits as a driver of prices, before acknowledging the latter's weight earlier this year following a Reuters article.

ECB salaries start at 38,868 euros ($41,200) per year and climb as high as 303,324 euros, plus allowances.

($1 = 0.9437 euros)

(Reporting by Francesco Canepa; Editing by Hugh Lawson and Ros Russell)