Life in Germany has become rapidly more expensive in recent years. Many employers have cushioned this somewhat with state support. But not all employees have benefited from this.
To cushion the high inflation, almost half of employees in Germany received a special payment from their employer last year. However, in a YouGov survey commissioned by Nuremberg-based Teambank, 21 percent of the beneficiaries answered no when asked whether they had “noticeably more money at their disposal” as a result of the inflation compensation. According to their statements, the bonus had a positive effect on 26 percent of the beneficiaries.
A tax-free inflation compensation premium is intended to provide relief to employees in the face of rising consumer prices. It is a voluntary payment by employers that is paid out in addition to regular income from work, either as a one-off payment or in installments. From October 26, 2022 to December 31, 2024, the premium is tax-free and exempt from social security contributions up to an amount of 3,000 euros.
Not everyone benefits equally
According to the survey, inflation compensation primarily benefited households with higher incomes. Around two thirds (64 percent) of employees who have more than 4,000 euros net per month said they received a special payment. In households with a net income of less than 2,000 euros per month, the figure was three out of ten employees (30 percent). In February of this year, YouGov asked 1,751 employees in Germany aged 18 to 79 questions about inflation compensation.
After the start of the Russian war of aggression against Ukraine in February 2022, energy and food prices in particular rose sharply, boosting inflation overall. In Germany, the annual average inflation rate in 2022 was 6.9 percent. In 2023, the rate was slightly lower at 5.9 percent, but was still at the second highest level since reunification. Higher inflation rates reduce the purchasing power of consumers. They can then afford one euro less.
According to the survey, many people (27 percent) saved the tax-free special payment to cover increased energy and heating costs. Almost as many (26 percent) used the extra money to maintain their standard of living. One in five (21) said they had consciously saved the money to fulfill their wishes.
Source: Stern
