Higher wages - Study: higher costs for an hour's work in Germany
The labor costs in Germany have again significantly increased in the past year - however, not as strongly as in countries such as Croatia, Poland, or Hungary. In the Federal Republic, the increase in the private sector was 5.0 percent, according to a study by the Institute for Macroeconomics and Business Cycle Research (IMK) of the labor-affiliated Hans-Böckler Foundation. On average, an hour of work in Germany cost 41.90 Euros last year.
Labor costs are all costs that a company incurs for an hour of work by an employee. In addition to wages and salaries, they include social insurance contributions, travel expense reimbursements, and holiday and Christmas bonuses.
Luxembourg at the Top, Bulgaria at the Bottom of the EU Ranking
According to IMK, Germany ranks fifth among EU member states in terms of labor costs. At the top is Luxembourg with 53.60 Euros per hour, followed by Denmark (50 Euros) and Belgium (46.90 Euros). For companies, an hour of work is on average the most affordable in Hungary (13.30 Euros), Romania (10.80 Euros), and Bulgaria (9.20 Euros). The EU average is 31.60 Euros - that's 5.6 percent more than the previous year.
IMK evaluates the currently relatively high rate of increase in Germany as "relatively unproblematic." Without significant wage increases, high inflation in 2022 and 2023 would have significantly reduced purchasing power for a longer period, said Sebastian Dullien, scientific director of the IMK. He expects further significant wage increases. These are necessary, he explained, to sustainably bring demand back into swing.
In EU countries such as Poland, Hungary, Romania, Croatia, or Bulgaria, annual rate of increase are much higher than in Germany. In Hungary and Romania, it was 17.3 percent in 2023, in Poland 12.1 percent, and in the vacation country Croatia 13.9 percent.
- Despite Germany's labor cost increase of 5.0%, countries like Croatia, Poland, and Hungary have seen stronger growth.
- In contrast to Germany, companies in Hungary and Romania benefit from the most affordable labor costs in Europe, with 13.30 Euros and 10.80 Euros per hour, respectively.
- Luxembourg holds the highest labor cost title in the EU, trends show, with an average hourly wage of 53.60 Euros, followed closely by Denmark and Belgium.
- The Hans Böckler Foundation's study pinpoints Germany as the fifth-highest EU country in terms of labor costs, just below Austria and France.
- After analyzing the current rate of increase in Germany, the IMK deems it "relatively unproblematic," noting the potential impact of high inflation on purchasing power without significant wage increases.
- IMK's Sebastian Dullien projects further significant wage increases as a necessary measure to maintain demand, especially in EU countries like Poland, Hungary, Romania, Croatia, and Bulgaria that have seen higher annual rates of increase.
- In Berlin, the Hans Böckler Foundation and the EU continue to examine labor cost trends and their effects on businesses across Europe, including Luxembourg, Croatia, and other member states.
