Only buffer one-off payments
Real wages are falling despite significant wage increases
09/07/2023 12:26 p.m
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If the inflation adjustment premium is left out, real wages fell in the first half of 2023. And this despite the fact that millions of employees benefit from higher wage agreements. However, experts see wage developments as positive.
According to calculations by the trade union-affiliated Böckler Foundation, the higher wage agreements in the first half of 2023 were not able to fully compensate for inflation. Only with the help of the frequently agreed one-off payments of up to 3000 euros would many collective bargaining sectors have contributed to securing real wages, explained tariff expert Thorsten Schulten, according to a statement. At the same time, he warned of a base effect: “Since these are one-off payments, they will have a strong dampening effect on wage development when they expire in the following years.”
Without the one-off payments, which are exempt from taxes and duties, real wages fell by an average of 1.7 percent in the first half of the year, according to the foundation’s WSI collective bargaining archive. The nominal increase of 5.6 percent in standard wages could not compensate for the inflation of 7.4 percent. Compared to the previous year, the tariff increases were significantly higher, which is due, among other things, to contracts with Deutsche Post and in the public sector of the federal government and the local authorities. Overall, a collective agreement applies to around half of the approximately 34 million employees in Germany who are subject to social security contributions.
For the second half of the year, however, Schulten expects inflation to fall sharply, so that a much more positive wage balance can be expected. “In view of the clearly deteriorating economic prospects, there must be no further slump in private consumption,” said the trade unionist with a view to wage negotiations in retail and in the public sector in the federal states, among other things. It is “particularly important” that the collective wage dynamics continue and that losses in purchasing power are avoided as far as possible.