Already because of the corona pandemic, German workers had to accept a loss in real wages – now the minus is even greater in the wake of the energy crisis. Although wages have risen by an average of 2.9 percent since April, there is less money in the wallet.
Due to high inflation, Germany’s employees have less money in their pockets despite wage increases. Wages, including special payments, were 2.9 percent higher in the second quarter of 2022 than a year earlier, as calculated by the Federal Statistical Office. However, because consumer prices rose by 7.6 percent during this period, the bottom line, according to the Wiesbaden authorities, was a drop in real wages.
The statisticians put the price-adjusted drop in earnings at 4.4 percent. In the first quarter of the current year, real wages fell by 1.8 percent compared to the same quarter of the previous year. Now the high rate of inflation has once again more than eaten up the increase in nominal wages.
Even in the years 2020 and 2021, which were shaped by the corona pandemic, employees had to accept real wage losses after many years of upswing. According to the Federal Statistical Office, when the pandemic broke out in 2020, real wages fell by 1.1 percent, compared to just 0.1 percent last year.
In the current year, inflation has remained stubbornly above the seven percent mark for months, even if there has recently been some relaxation thanks to government relief. In autumn, however, inflation in Germany could rise again because relief measures such as the 9-euro ticket or the fuel discount expire. The federal government has already announced new simplifications. It is not yet clear what kind these will be.
Economists are calling for wages to be adjusted. “Only higher wages and social benefits can compensate for the damage to people with medium and low incomes in the long term,” said Marcel Fratzscher, President of the German Institute for Economic Research (DIW). In addition, the best way to deal with inflation is tax relief and higher social benefits for people with middle and low incomes.
Like Fratzscher, “Wirtschaftswise” Veronika Grimm was skeptical about one-off payments. If you forego wage increases for one-off payments, they would have to be very high, according to Grimm. “Of course, that could immediately fuel demand and thus inflation again.”
