Real wages in Germany fell sharply in second quarter of 2020

Compared to the same quarter of the previous year, real wages in Germany fell by a record 4,7 percent in the first quarter of 2020, according to new figures from the Federal Statistical Office (Destatis). 

Real wages in Germany fall sharper than ever

Real wages in Germany fell sharper than ever before in the second quarter of 2020 - an indication of the effect the coronavirus pandemic is having on the labour market. The nominal wage index - which shows the development of gross monthly earnings, including special payments - fell by 4,0 percent compared to the same quarter last year. At the same time, consumer prices rose by almost 0,8 percent, resulting in a real (price-adjusted) drop in earnings of 4,7 percent. 

Destatis reports that, historically, this is the strongest decrease in both nominal and real wages since records of this type began in 2007 - and is therefore a sharper fall than during the financial crisis of 2008 / 2009. In the first quarter of 2020, real wages rose by 0,4 percent - the weakest rate of increase since the last quarter of 2013. In terms of nominal wages, it is the first negative development in Germany since the second quarter of 2009. 

Working hours in Germany declined in Q2

The negative wage development in the second quarter of 2020 was primarily driven by business closures and an overall reduction in working hours. Compared to the same quarter of the previous year, the average number of hours worked by full-time employees in Germany fell by 6,2 percent in the second quarter of 2020, to 36,8 hours per week. Back in the second quarter of 2009, a decline of 2,1 percent was recorded. 

Comparatively, unskilled and semi skilled workers were hit hardest by the decline in working hours and thus earnings. The number of hours worked fell by 9,8 percent for unskilled workers and 9,4 percent for semi skilled workers. Earnings as measured by the nominal wage index fell by 7,4 percent and 8,9 percent, respectively.

By comparison, both the earnings (-2,0 percent) and weekly working hours (-3,0 percent) of employees in management positions declined less strongly.