After three years of massive declines in real wages, employees covered by collective agreements in Germany are catching up. Their salaries are growing faster than they have in a long time. But it will not last that way.
Collective bargaining employees in Germany are experiencing strong increases in their salaries this year. On average, collective bargaining wages are increasing by 5.6 percent this year, reports the WSI collective bargaining archive of the trade union Hans Böckler Foundation.
Because consumer prices only rose by an average of 2.4 percent in the first half of the year, there was a significant increase in real wages of 3.1 percent. After deducting inflation, employees can therefore buy more services and goods than a year ago. Such a strong increase has never been seen in this millennium, according to the analysis.
However, the loss of purchasing power from 2021 to 2023 has only been compensated for by around half, says WSI collective bargaining expert Thorsten Schulten. “Overall, however, the price-adjusted level of collectively agreed wages is still well below the peak value of 2020.” This means that there is still a lot of catching up to do in future collective bargaining negotiations. Rising real wages also make economic sense in order to stabilize economic development.
The calculations are based on the collective agreements from the first half of the year and the previous year, the increases for which will take effect in the current year. These often also include one-off inflation compensation premiums that have been made tax- and duty-free by the state. Since these payments will not be repeated, they automatically have a base effect that dampens wage developments in 2025. Schulten therefore expects significantly lower real wage increases for the coming year.
Source: Stern
