Amidst a shifting European economic landscape, recent data from May 2025 reveals a striking divergence in wage growth across key economies. While the United Kingdom reported the highest real wage increases, significant variations persist not only between nations but also across specific occupational sectors, highlighting distinct labor market dynamics shaped by policy, supply, and demand.
- The United Kingdom led major European economies with a 2.3% real wage growth year-on-year in May 2025.
- Legal professions demonstrated exceptional real wage growth, with a 5.7% increase in Germany and a 4.3% rise in the UK.
- Germany’s technology sector, including IT operations & helpdesk and software development roles, experienced notable real wage declines.
- France exhibited a relatively uniform and subdued real wage growth profile, largely influenced by the indexation of its minimum wage to inflation.
- The Netherlands saw strong real wage gains in sectors like cleaning & sanitation (4.0%) but concerning declines in care-related occupations such as nursing and childcare.
- The UK’s elevated nominal wage growth is attributed to government-mandated minimum wage increases and constrained labor supply due to lower immigration and economic inactivity.
Analysis of salary data from global hiring platform Indeed, alongside Consumer Price Index (CPI) figures from the ONS and Eurostat, shows robust nominal wage growth across major European economies. The UK led with a 5.5% year-on-year increase, followed by the Netherlands at 5.3%, Germany at 3.8%, and France at 1.9%. When adjusted for inflation, real wage growth stood at 2.3% in the UK, 1.8% in the Netherlands, 1.6% in Germany, and 1.1% in France over the same period, underscoring the UK’s relative strength in purchasing power gains.
Delving deeper, a granular examination of the 25 largest occupational categories by job posting share reveals considerable variance in real wage trajectories across the continent. Legal professions demonstrated exceptional growth, particularly in Germany, where they saw a 5.7% increase, and in the UK, with a 4.3% rise. For context, the average annual salary for a lawyer was approximately £53,420 in the UK and €71,274 in Germany as of mid-2025. Conversely, the management and security & public safety sectors in France registered the highest real wage growth at around 2%, while cleaning & sanitation roles led in the Netherlands with a 4% increase, closely followed by security & public safety at 3.9%.
Drivers of Disparity in European Labor Markets
The United Kingdom’s Dynamic Labor Market
The UK’s persistent high wage growth has been a focal point for economists. Pawel Adrjan, Director of Economic Research at Indeed, notes that despite a significant fall in demand for new workers, nominal wage growth remains elevated. This trend is largely attributed to government-mandated increases in the minimum wage, which create ripple effects across the entire wage distribution as employers adjust salaries to maintain internal equity. Furthermore, labor supply in the UK is constrained by lower immigration rates and elevated economic inactivity, compelling employers to offer higher wages to attract and retain talent.
Within the UK, beyond the top-performing legal sector, several other major occupations experienced substantial real wage jumps exceeding 3%. These included roles in retail (3.3%), production & manufacturing (3.2%), loading & stocking (3.1%), and customer service (3%). While growth was generally steady, the only notable outlier on the downside was software development, which saw a 2.2% decline in real wages. Health and care-related occupations, such as nursing (1.7%), childcare (2.3%), and personal care and home health (2.1%), recorded modest gains, underscoring varied pressures across the service sector.
Germany’s Sectoral Shifts and Policy Influence
In Germany, while legal roles led growth, production & manufacturing and medical technician jobs also saw significant increases, both at 4.1%. Education, security, media, and human resources roles also demonstrated solid gains between 3.5% and 3.9%. However, the German market presented a notable contrast in the technology sector, where IT-related roles experienced considerable real wage declines. For instance, IT operations & helpdesk roles saw a 6.4% reduction, and software development jobs registered a 4.2% decrease, indicating a reduction in purchasing power for these professionals. Adrjan attributes Germany’s overall wage growth, which remains above the Eurozone average, largely to a coordinated process of union negotiations, many of which have concluded with multi-year wage increases that continue to influence aggregate trends.
France’s Stabilized Wage Growth
France exhibited a flatter real wage growth profile across many sectors, with most occupations clustered between 0.5% and 1.5%. While management and security & public safety led at 2%, sectors like personal care & home health, banking & finance, and software development saw minimal increases of 0.2% or less. This relatively subdued and uniform growth pattern is largely explained by a high degree of indexation of the minimum wage to inflation, alongside union-negotiated wages that closely follow this trend. This mechanism allowed wage growth to respond swiftly to inflation increases in 2022 and 2023, as well as to the subsequent slowdown, contributing to greater stability in real earnings.
Netherlands: Varied Performance with Care Sector Concerns
The Netherlands demonstrated strong wage growth in sectors like cleaning & sanitation (4.0%), security & public safety (3.9%), banking & finance (3.4%), management (3.1%), and construction (3.0%). However, the Dutch labor market showed a concerning trend in several care-related occupations, which experienced real wage declines. This included nursing (-0.3%), childcare (-0.5%), and physicians & surgeons (-0.6%), highlighting a potential disparity in compensation for essential service roles despite overall economic growth. This divergence underscores the complex interplay of demand, supply, and policy within specific segments of the Dutch economy.
Michael Carter holds a BA in Economics from the University of Chicago and is a CFA charterholder. With over a decade of experience at top financial publications, he specializes in equity markets, mergers & acquisitions, and macroeconomic trends, delivering clear, data-driven insights that help readers navigate complex market movements.