Workers in Germany received an average pay rise of 3,4 percent in 2022, but their pay packets aren’t stretching as far as they did in the previous year. While all industries are affected, low-income workers are bearing the brunt of real wage losses.

Real wages sink in Germany

According to new data from Destatis, real wages in Germany have sunk to historic lows. 2022 was the year that inflation in Germany reached post-WWII levels of 7,9 percent, and while workers saw an average 3,4 percent top-up to their wages during the year, the boost has not been enough to compete with inflation, meaning that real wages have fallen by 4,1 percent.

The trend of wages rising faster than inflation had been ongoing since the 2010s. But coronavirus and the transition for many employees to reduced working hours put an end to the decade-long trend. With Putin’s invasion of Ukraine, the decline in real wages reached new levels as the price of gas and electricity soared. 

Real wage losses vary across German industries

Though the Destatis data shows an average decrease of 4,1 percent, real wage losses vary from industry to industry in Germany.

Workers in the hospitality industry were one of the few groups fortunate enough to not have been hit so badly by real wage losses, since collectively agreed wages rose more than inflation. “Because minimum wages increased, collective agreements [made by trade unions] had to be adjusted,” said Thorsten Schulten, head of the Collective Agreement Archive at the Hans Böckler Foundation.

Despite this, low-income earners are feeling real wage losses more profoundly in other ways. Many now have to spend a larger percentage of their income on increasingly expensive necessities such as food and utilities.

For those in the public sector or metal and electrical industry collective, bargaining agreements from 2021 are still in place, meaning that the income amounts were agreed upon in a very different economic context. “Many wage increases that were negotiated in 2022 will only take effect this year,” said Schulten.

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