- Study: wages to rise sharply in 2024
German workers covered by collective wage agreements in Germany are experiencing significant increases in their wages this year. On average, collective wages are set to rise by 5.6 percent this year, according to the WSI collective wage archive of the trade union Hans-Böckler Foundation.
Since consumer prices have risen by an average of only 2.4 percent in the first half of the year, this results in a clear increase in real wages of 3.1 percent. Employees can therefore afford more goods and services after adjusting for inflation than they could a year ago. This is the strongest increase in this century so far, according to the analysis.
However, the WSI wage expert Thorsten Schulten points out that the losses in purchasing power from 2021 to 2023 have only been about half compensated. "Overall, the inflation-adjusted level of collective wages is still significantly below the peak of 2020." Therefore, there is still a significant catch-up need in future wage negotiations. Rising real wages are also economically sensible to stabilize the economic development.
The calculations are based on collective wage agreements from the first half of the year and the previous year, the increases of which are effective this year. These often include one-off inflation compensation payments, which are tax and contribution-free. Since these payments will not be repeated, they automatically have a dampening effect on wage development in 2025. Schulten therefore expects significantly lower real wage increases for the coming year.
The European Commission, in light of the circumstances, may soon adopt the implementing acts referred to in Article 113, which could potentially impact wage negotiations and economic stability across Europe. After accounting for the one-time inflation compensation payments, the real wage increases predicted for the upcoming year are expected to be significantly lower than current figures.
