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According to the OECD's Employment Outlook 2026, real wages in Italy, Spain, France, and the UK are expected to fall between 2026 Q1 and 2027, while Germany will see a rise. In Italy and Spain, wages are likely to remain below early 2026 levels until late 2027. The report attributes this to geopolitical uncertainties, temporary energy cost increases, and their impact on the labor market and inflation.

OECD economist Alexandre Georgieff explains that differences in wage growth projections stem from varying inflation, unemployment, and labor market slack expectations. Italy faces the largest decline, with real wages dropping 1.9% below early 2026 levels in Q3 2026, narrowing to 1.4% by Q1 2027 and remaining 0.6% below in 2027. Spain's decline is smaller but persists, with wages falling 0.4-0.7% in 2026 and 2027, ending 0.7% below early 2026 levels.

The UK experiences a 0.6% drop in Q2 2026 and 1.5% in Q3, recovering to 0.4% below early 2026 levels by 2027. France sees a smaller 0.5% decline in Q2 2026, returning to early 2026 levels by Q2 2027, and ending 2027 just 0.1% higher. Germany is the only country with rising real wages, growing 0.1-1.7% by the end of 2027 due to a tight labor market and fiscal expansion.