High inflation will also cause real wages in Germany to fall in 2023. And this despite the fact that gross wages have recently risen sharply. In the first quarter, the gross monthly earnings of employees rose by 5.6 percent compared to the same period of the previous year, more than at any time since the statistics began in 2008. However, the increase in prices by 8.3 percent was significantly stronger in the same period.
From this difference, experts from the Federal Statistical Office calculated a real drop in earnings of around 2.3 percent compared to the same period last year. “A trend from 2022 is thus continuing: the high inflation more than consumed wage growth for employees at the beginning of 2023,” is the conclusion of the Federal Statistical Office.
Because many consumers are consuming less as a result, the German economy slipped into a recession in the first quarter. All the same, the loss of purchasing power was lower than in the previous three quarters compared to the same period of the previous year. In the previous year, real wages even fell by up to 5.4 percent at times.
“The payments of the inflation compensation premium also contributed to this cushioning of the loss of purchasing power of the employees,” it said. This can be up to 3,000 euros tax- and duty-free and is a voluntary benefit from the employer.
In 2023, workers are thus threatened with real wage losses for the fourth year in a row. Substantial wage increases have been approved in some sectors, but inflation remains stubbornly high. According to a survey by the Reuters news agency, economists assume that consumer prices in the mail will rise by 6.5 percent compared to the same month last year. While that would be the lowest level in more than a year, it is still well above many wage increases. The Federal Statistical Office will publish its first estimate this Wednesday.
Marginally employed people experienced the strongest nominal wage increase in the first quarter at 8.9 percent. “This is mainly due to the increase in the mini-job earnings limit from 450 euros to 520 euros, which has been in effect since October 1, 2022,” the statisticians explained. The nominal wages of full-time employees also rose slightly above average, by 5.9 percent. A wage increase of 4.7 percent was recorded for part-time employees and trainees.