The holidays are coming and we’ll probably swear. A labor dispute at the railway is approaching. But the argument helps us all – the government should even be grateful.
Strike is stupid. Or? Standing in the station, watching the board with the departure times and seeing how more and more trains are cancelled, while you think of your trip that is now cancelled, of your wife, your husband, whom you will not hug today. Anger then creeps up in his throat.
Now this trouble threatens in the summer holidays of all places. Negotiations with the railways have failed, the railway workers’ union is calling its members to a ballot, and a labor dispute is looming.
Maybe in July or August we will stand in front of the departure board and swear, and some will ask: What have I got to do with it?
I would say more than you think.
Strike makes governing easier
Because the strikes help you personally, for example with your pension and health insurance. Health Minister Karl Lauterbach (SPD) and Labor Minister Hubertus Heil (SPD) should basically thank Verdi, EVG and Co. personally. The strikes make governing easier.
Do not you believe?
Right but.
If the unions push through higher wages, it fills the coffers of pension, health, unemployment and long-term care insurance.
Why is that?
In the social contributions. They are charged as a percentage of the salary, and if the salary rises, more contributions flow to the cash-strapped social security funds, which can already look forward to additional income from the recent increase in wages.
Five billion more for pension
Let’s take pension insurance. At the end of April, it had earned almost five billion euros more than a year earlier, the surplus at the end of December was 3.4 billion euros, and the contribution rate at 18.6 percent is the lowest it has been in 20 years. There is no need to save for retirement. On the contrary, Minister of Labor Hubertus Heil can probably implement his plans, with which he wants to keep old-age security stable in the medium term, without additional taxpayers’ money. Finance Minister Christian Lindner (FDP) will be happy about that.
Similar to health insurance. A few months ago, cash register managers were still shouting: “We are threatened with a huge billion-dollar deficit.” 17 billion euros would be missing this year, now it’s only 3.5 to 7 billion euros, which is easy to arrange, but we’ll get to that.
Unemployment insurance is also doing well, and will probably register a surplus of 1.7 billion euros this year. Long-term care insurance is in a slightly worse position, with a deficit of 2.2 billion euros at the end of December, which has meanwhile increased. This is because the long-term care insurance took on some tasks during the pandemic that the federal government did not pay for. The nursing care funds see the open bill at 5.5 billion euros, and because the federal government does not want to take over the lid, you and I have to step in. At the beginning of July, the long-term care insurance contribution will increase by 0.35 percentage points to 3.4 percent of gross wages.
Of course, some will now think: It’s all well and good with the social security funds, but what’s the point of the higher wages if I pay more for the nursing care insurance in a few days and more for the health insurance from January, as Health Minister Karl Lauterbach announced . Doesn’t remain “less net than gross” (Handelsblatt)? Threatens after the “heating hammer” (Picture) even the “contribution hammer” (Mirror)?
no way. Wages are rising so sharply that the average employee can easily cope with the additional burdens.
According to the federal government, wages will increase by an average of five percent this year, and that’s not even very daring. In the pension fund alone, revenue increased by 5.7 percent in the first four months, although less money should have accumulated there. In April, almost 280,000 more people were unemployed than a year earlier, which actually means they pay less into the pension fund. However, rising wages appear to have offset these consequences.
And this increase helps. Let’s take an employee who earns about 3000 euros gross per month. With him, 150 euros gross more flow into his account per month, based on a five percent increase in wages. The burden of health insurance (the additional contribution is to increase by 0.2 to 0.4 percentage points from the gross wage and is charged in addition to the general health insurance contribution) and nursing care insurance is around 17 to 23 euros per month. The bottom line after taxes is a good 60 euros net.
The employee has more net
Wait a minute, some cunning foxes will say. There is still the cold progression. That secret tax hike that occurs when inflation eats up a pay rise completely, and the worker ends up paying more in taxes because the pay rise has put them in a higher tax bracket.
Is correct. The cold progression is there. But it won’t play a major role this year because Finance Minister Christian Lindner already defused it with a law last year. The individual employee therefore actually has something of the wage increase, he has more left over net.
And the inflation? There are still. But it is no longer as strong as it was last year and is expected to continue to fall in the coming months.
Of course, wages are not only rising because of the unions. Conditions on the labor market have changed, young people can demand more because they are few and therefore sought after, so companies have to lure them with money. At the same time, expenses have also fallen. For example, the health insurance companies spend less money on the clinics because fewer people go to the hospital. The pension insurance pays fewer pensions because Covid – this is unfortunate, but unfortunately happened – many older people died.
The companies have skimmed
Not everyone likes the higher wages. For example the entrepreneurs. You and some economists rant about rising spending and predict falling prosperity. But do you really have to take it seriously? even have pity?
No. Many companies have skimmed off the inflation. Or as Isabel Schnabel, board member of the European Central Bank (ECB), puts it: “Companies have been able to increase their profits.” According to an ECB study, not only the oil companies have benefited greatly, for example because energy prices have risen, but also agriculture, trade, transport, gastronomy, the construction sector and industry have raised prices excessively and thus even fueled inflation. The 40 German DAX companies recently had a record year, with VW and Mercedes-Benz alone each making a profit of over 20 billion euros. Some are already talking about the “greed inflation” of companies.
So when the unions go on strike, they ensure a little justice. Companies have to empty their overflowing pockets a bit, that helps their own wallets and fights inflation a bit, because companies can’t keep raising prices. Customers are already hesitating before making a purchase. And it benefits pensions, health insurance companies and Co. because they fill up their cushions and are better equipped for future expenses. Anyone who stands in front of the departure board and curses the strike can perhaps be a small consolation.