IT Sector Faces Salary Decline Amid Inflation Challenges

In 2024, while overall wages in the German economy saw an increase, certain IT professions, notably software developers, struggled to keep pace with inflation. An analysis of job postings from the platform Indeed reveals that software developers experienced an average salary decrease of 0.7%. On the other hand, roles in IT support and infrastructure recorded a modest salary increase of 0.8%, which still fell short of the average inflation rate of 2.2% for the same year.

This trend places these IT positions among the lowest in terms of salary growth when compared to 20 key professions analyzed by Indeed. Out of these, 18 professions witnessed wage growth, averaging a 3.2% increase across the board.

Virginia Sondergeld, an economist and labor market expert at Indeed, notes that the decline in software development salaries is surprising, especially after years of significant wage increases. Many high-paying IT jobs are now particularly affected by the cost-cutting measures adopted by numerous companies.

Despite these challenges, IT roles generally remain above the wage levels of other professions that achieved salary increases last year. Sondergeld observes a cooling trend in wage growth among traditional office jobs.

Furthermore, the demand for software developers is decreasing, with Indeed reporting that no other profession has seen such a drastic drop in job postings over the past year. As a result, job security is becoming a more critical factor for developers than potential salary increases, according to Indeed's assessment. This trend aligns with findings from the Institute of the German Economy (IW), which noted a general decline in job postings for IT roles in its previous MINT Autumn Report.

Contrastingly, data from the Federal Statistical Office (Destatis) reveals a different perspective on wage developments. According to their figures, nominal wages in Germany rose by approximately 5.4% in 2024 compared to the previous year. After adjusting for inflation, real wages increased by around 3.1%, marking the most significant growth since the inception of these statistics in 2008. Factors contributing to this real wage growth include inflation compensation bonuses, collective wage increases, and one-time payments.

However, Destatis does not provide specific salary developments for IT professionals. In the broader category of 'Information and Communication,' Destatis reports a 6.9% increase, which encompasses a variety of sectors, including software companies, publishing houses, broadcasting companies, and telecommunications providers. Additionally, Destatis categorizes data by economic sectors rather than individual professions, making it challenging to isolate trends specific to software developers.