Almost 26 million employees have received more than 52 billion euros in inflation compensation bonuses
Twenty-six million employees received more than 52 billion Euro as inflation adjustment bonuses, according to the IMK Institute of the Hans-Böckler Foundation. This helped stabilize the economy and alleviated concerns for people, the institute announced at a study presentation on a Wednesday. Around two-thirds of the employees who received a bonus considered it a medium to large relief in times of high prices. Employees with bonuses were found to cut their consumption noticeably less frequently than those without. Companies with collective bargaining agreements and works or personnel councils reportedly paid significantly more and more frequent inflation adjustment bonuses.
To mitigate the economic consequences of the Ukraine war, the German government allowed companies to pay their employees tax- and duty-free supplements of up to 3000 Euro on top of their salary until the end of 2024. The goal was to stabilize purchasing power without triggering a wage-price spiral. According to the IMK study, this was successful. The bonus made a significant contribution to financially relieving many employees and stabilizing purchasing power. Furthermore, the cost pressure on wages due to second-round effects was limited, write IMK researchers Jan Behringer and Sebastian Dullien. Economically, the relief through the bonus amounted to approximately one percent of the gross domestic product, and wage costs were reduced by around 1.5 percent.
- The IMK Institute's study revealed that almost two-thirds of the employees who received inflation adjustment bonuses considered them a medium to large relief during high inflation periods, thanks to the bonuses provided by their companies.
- The IMK Institute also reported that companies with collective bargaining agreements and works or personnel councils paid more frequent inflation adjustment bonuses, amounting to over a billion Euro in total, helping to significantly reduce consumption cuts among employees.
- In light of the Ukraine war, the German government's decision to allow companies to pay inflation adjustment premiums up to 3000 Euro tax-free resulted in nearly a million employees receiving millions of Euro in additional income, contributing significantly to mitigating the economic consequences and stabilizing purchasing power.
