Whether future wage agreements will lead to a more balanced distribution of the costs associated with the energy shock, or whether they will lead to a perilous wage-price spiral, will ultimately depend on  the credibility of the euro area’s nominal anchor. If long-term inflation expectations remain anchored, the risks of a wage-price spiral will be limited.
This is what we have observed so far in the euro area. The ECB’s forward-looking wage tracker currently points to further increases in wages, but these are expected to remain at levels that are unlikely to set in motion a harmful wage-price dynamic.