Significant escalation in genuine salary earnings since 2008. - Significant surge in actual earnings since 2008
In a surprising twist, despite a gloomy economic outlook, workers in Germany are actually seeing more cash in their pockets. The reason? Inflation isn't rising as rapidly as it once was, leaving more dispensable income for consumption. In fact, real wage growth hit an all-time high of 3.1% in 2022, a figure not seen since 2008. As per the Federal Statistical Office, this is a result of a 5.4% increase in average gross wages, minus the now-subdued 2.2% inflation rate.
This wage boost can be attributed to a variety of factors. Collective bargaining agreements and high inflation compensation payments have played a role. These measures were designed to cushion employees from the financial burdens of high inflation in the past. However, according to calculations by the Hans Böckler Foundation, real wage losses from the Corona and Ukraine war years haven't been fully compensated yet. In fact, real wages were still lower than 2019 levels last year, as pointed out by Böckler expert Malte Lübker.
The wage growth story continues into the fourth quarter of 2024, with a 2.5% increase, marking the seventh consecutive quarter of wage gains. For 2023, however, analysts expect a slowdown in wage increases, as many one-time payments from the previous year won't be repeated.
Interestingly, women appear to have benefited more from wage growth, with a 5.8% increase compared to men's 5.3%. Sectors like information and communication, health and social services, and banking and insurance saw substantial wage hikes last year. The one-time payments particularly boosted incomes for lower-income groups by an impressive 7.8%.
Various factors have influenced this wage growth. The introduction of the minimum wage, shifts in union wage policies, labour market tightness, and inflation-driven real wage catch-up all contributed to this trend. However, it remains unclear if these wage increases have fully compensated for real wage losses during the Corona and Ukraine war periods.
[1]: Adapted from enrichment data.[3]: Adapted from enrichment data.
Employment levels in Germany might also see an increase in 2023, as higher wages could lead to stronger consumer spending, potentially boosting the economy. The Hans Böckler Foundation's analyst Malte Lübker predicts that wages in 2023 might not reach the highest level seen in 2022's 5.4% increase, but they could still surpass the average wage growth of the past decade with a positive figure. Plus, he suggests, the 2023 wage figures might not include the one-time payments from the previous year, which could have artificially inflated the wage growth numbers.