Real wages in Germany increase after 2 years of losses

According to the Federal Statistical Office (Destatis), real wages in Germany have increased for the first time in two years. Nominal wages have seen the highest increase since Destatis began collecting data on a regular basis in 2008.

German workers see real wage increase

In the second quarter of 2023, people working in Germany saw their first real wage increase in two years, Destatis has reported. Nominal salary increases of 6,6 percent were greater than the rise of consumer prices on the German market, which lies at 6,5 percent.

In simplified terms, real wage losses are calculated by comparing the absolute growth in wages to the increase in consumer prices. According to the new data, this means that employees in Germany are seeing a 0,1 percent growth in real wages in comparison to the same period in 2022.

The 6,6 percent increase in nominal wages - the amount that employees are paid before losses or gains linked to inflation are calculated for - amounted to the highest increase since Destatis began collecting the data on a regular basis in 2008.

Why are Germany’s real wages increasing and for whom?

Destatis named the Inflationsausgleichprämie (inflation compensation premium), a policy operating between October 2022 and 2024 which means employee bonuses of up to 3.000 euros are tax-free, and an increase in the German minimum wage to 12 euros per hour as the main reasons for the real wage increase.

According to Destatis, employees working in sectors heavily impacted by coronavirus, such as hospitality and the entertainment sector, have seen the biggest real wage increases in the second quarter of 2023.

Hospitality workers saw their wages increase by 12,6 percent and those in entertainment by 11,9 percent. Destatis found that the pre-crisis level, measured by the nominal wages of 2019, has returned across almost all sectors.

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