Hardly any inflation compensation
Employees are recording real wage losses despite wage increases
December 7, 2023, 1:41 p.m
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The collective agreements in 2023 will be characterized by table increases and one-off payments of up to 3,000 euros. The bottom line is that many people still have too little left, says the union-affiliated Böckler Foundation.
Despite falling inflation and rising collective wages, many people have jobs In fact, there is less money in your pocket this year. Like from one Analysis of the Institute of Economics and Social Sciences (WSI) from the trade union-affiliated Hans Böckler Foundation shows that collective bargaining wages in 2023 will have risen nominally by an average of 5.6 percent compared to the previous year. “In view of an expected increase in consumer prices of 6.0 percent for the whole of 2023, this would result in an average decline in real wages agreed in collective agreements of 0.4 percent,” explained the researchers.
In order to alleviate the consequences of inflation for employees, the federal government had agreed with employers and unions in 2023 and 2024 to make tax- and duty-free special payments of up to 3,000 euros. Taking these one-off payments into account, the financial balance for some of the employees is likely to be more positive – in some cases inflation is said to have been exceeded, explained Thorsten Schulten, head of the WSI tariff archive. However, due to their complexity, according to the WSI, the inflation compensation premiums could not be “fully” taken into account in the calculations.
“The purchasing power of collective bargaining employees could be almost guaranteed in 2023,” explained Schulten. “However, the significant real wage losses of the two previous years remain, which cannot be compensated for within a single collective bargaining round.” In addition However, the one-off payments can have a significant dampening effect on wage development in the following years, according to the archive manager.
Real wages have fallen sharply in the last two years
In 2021 and especially last year, inflation caused real wages in Germany to shrink sharply. According to the WSI, real wages fell by 4.7 percent last year – “a historically high value in the Federal Republic”.
While collective bargaining wages increased continuously in real terms in the 2010s and the real wage gain amounted to 14 percent by 2020, according to the WSI, prices rose significantly more than wages in 2021 and especially in 2022. As a result, almost half of the real wage growth was lost again.
Adjusted for prices, the pure collective bargaining wages are now “back to the level of 2016,” the researchers explained. However, things are looking better in many sectors this year because of the tax- and duty-free inflation compensation bonuses. The reason is that these one-off payments were taken into account in the WSI calculations, but not the taxes and duties saved. This is not possible because of the complexity.
Exception: wage increase in the public sector by 9.8 percent
Instead, the WSI researchers created model calculations for individual tariff sectors. Result: “If the ‘gross-for-net’ effect of the inflation compensation premiums is taken into account, the collective wage increases in 2023 will be significantly higher in some sectors.” In the public sector, for example, there was an average wage increase of 9.8 percent – three percentage points more than the regular result.
The researchers explained that the inflation bonuses also led to “a disproportionate wage increase in lower wage groups.” This was reinforced by many deals in 2023 that combined percentage increases with fixed minimum amounts. “The collective bargaining parties have thus taken into account the fact that the lower wage groups suffer particularly from the high rates of price increases,” explained Schulten.
Outlook for the 2024 collective bargaining rounds
With a view to collective bargaining rounds next year, Schulten said: “In view of significantly declining inflation rates, the pressure on the collective bargaining parties should ease somewhat again in 2024.” However, due to the real wage losses of previous years, there is still a need to catch up, as dAccording to Böckler’s calculations, current real wages after three negative yearsn again correspond to the level of 2016.
“Rising real wages are also important in order to stabilize the weak economic development in Germany.” However, employer representatives warn against overburdening companies financially during the economic downturn.