Germany's lower middle class being left behind on salary growth

As high-income earners see their salaries increase, those on low incomes are benefiting from the rising minimum wage. But, according to a new study, one group in particular is being left behind when it comes to salary development: the lower middle class. 

Lower-middle class saw smallest wage increase over last decade

The new study by KfW, a state development bank in Germany, compared wage increases across various income groups over the past decade, and concluded that those in the lower midfield in terms of qualifications and wages are losing out compared to their colleagues. Typically, this group earns more than the minimum wage, but doesn’t work in a field where specialisations and shortages of workers automatically drive up wages.

Accordingly, the so-called “top performance group” - which includes managers and specialists - saw their wages increase by an average of 26,9 percent between 2010 and 2020. This is above the 23,4 percent average rate recorded for all employees and the 18,4-percent increase given to unskilled workers, via the implementation of the minimum wage in 2015 and its subsequent (and multiple) increases. 

In fact, the smallest increase went to the second-lowest performance group, whose wages went up just 16,5 percent in the same period. Employees in this group generally don’t have a certified professional qualification, but have some work experience in their field. 

Some sectors saw salaries increase by 40 percent in 10 years

While qualifications and professional experience certainly influence the development of wages, the study also found that certain industries recorded much stronger wage increases than others. In research and development, information services and earthworks, employee wages have increased by more than 40 percent over the past decade. 

There was also growth of more than 35 percent for employees in nursing homes, guard and security services, civil engineering and temporary work. 

German tax system helps iron out income inequality

Martin Müller, who authored the study, said the findings were confirmation that a good education and qualification policy was essential for alleviating worker shortages and boosting wages across the board. 

He added that the results show that the German tax system is effective at curbing income inequality, with the net earnings of the five different income groups much closer than the gross wages. According to his calculations, the lowest earners give around 30 percent of their gross monthly income to the state, while the top earners give a little more than 40 percent.