The real incomes of many German employees covered by collective bargaining agreements are significantly decreasing due to high inflation, despite already agreed-upon wage increases. According to data from the Federal Statistical Office (Destatis), the current inflation rate in Germany is 7.5%. Prices have risen even more sharply in some areas, such as food (+14.4%), construction prices (18%), and energy (35.7%) this year. A study by the Economic and Social Sciences Institute (WSI) shows that the already agreed-upon average 2.9% wage increases for collective bargaining employees cannot compensate for inflation. After subtracting the inflation rate, the real incomes of collective bargaining employees are decreasing by 3.6%.
Thorsten Schulten, the head of the WSI collective bargaining archive, explains that after a relatively significant increase in real wages in the 2010s, many employees face real wage losses for the second year in a row in 2022. The study includes all wage increases agreed upon in the first half of this year and the previous year for 2022. In response to the real wage loss, the union-affiliated institute is calling for government assistance. Schulten criticizes the unions’ calls for restraint, stating that the much-discussed wage-price spiral is a mirage.
Despite high inflation, some industries are experiencing real wage increases, particularly in traditional low-wage sectors such as building cleaning, hotel and catering, and temporary work. According to Schulte, these industries are responding to the increasing labor and skills shortages with exceptionally high wage increases. Additionally, they are using the German government’s decision to raise the minimum wage to twelve euros to rebuild wage structures above that level. In total, around eleven million employees will receive wage increases this year, some of which were already agreed upon in 2021 and earlier. This includes large sectors such as retail and the public sector. Furthermore, further wage negotiations in the second half of the year could result in higher wages for employees in the chemical and metal and electrical industries.
In conclusion, despite already agreed-upon wage increases, many German employees covered by collective bargaining agreements are experiencing real wage losses due to high inflation. The WSI is calling for government assistance to offset these losses, while some industries are experiencing real wage increases due to labor and skills shortages.
