Employees are losing more wages than ever before

Tue 13th Dec, 2022

Image by Erdenebayar BayansanGermany's employees will have lost significant portions of their wages in 2022 - more than ever before in the history of the Federal Republic. This is the result of figures from the Hans Böckler Foundation, which is close to the trade unions. Its researchers have evaluated the wages of the approximately 20 million employees who are paid according to collective agreements.

On paper, there is an increase: Wages rose by an average of 2.7 percent compared to the previous year. In view of the historically high inflation, estimated at 7.8 percent for the entire year, the bottom line is a fat minus of 4.7 percent on average. The head of the Böckler Foundation's wage archive, Thorsten Schulten, speaks of a "real wage loss that is unprecedented in the history of the Federal Republic of Germany".

The researchers cite two reasons for this. First, many collective agreements under which employees are currently paid were concluded before the current crisis and were not renegotiated again this year. As a result of the Russian war of aggression on Ukraine, the inflation rate, which had already risen in previous months, shot up again sharply from the spring.

The second reason is that many collective agreements concluded this year do not provide for significant wage increases or one-off payments until next year.

Good collective agreement - but the money won't arrive until 2023 or 2024

A good example of this is the most important collective agreement of the year in the metal and electrical industry, which affects almost four million employees. Although IG Metall secured a substantial increase - 8.5 percent more pay in two steps and two special payments totaling 3,000 euros - the money will not reach employees until next year and the year after.

However, this does not mean that employees are completely unprotected this year. Many will benefit from the federal government's relief packages, such as special payments or the electricity and gas price brakes. However, these instruments will also not take full effect until 2023.

This is the third year in succession that pay-scale employees' wages have fallen. In 2021 and 2020, they shrank by a total of seven percent, the cause being the economic crisis triggered by the Corona pandemic. In the 2010s, by contrast, real wages had risen by 14 percent, according to the Böckler Foundation.

Despite the overall poor development, the report also contains one piece of good news: In some sectors, employee wages have not shrunk, contrary to the trend. These include, above all, classic low-wage industries such as the bakery trade, the hotel and restaurant industry and building cleaning. According to the researchers, the reason for this is that the German government has raised the minimum wage to twelve euros. This has also driven up collective wages in these sectors.

The researchers expect wages to rise significantly in 2023 - and they could be right. On the one hand, the new, better collective agreements will then take effect, for example in the metal and chemical industries.

On the other hand, the unions are demanding significantly higher wages in the major upcoming rounds, especially in the public sector. For the more than two million employees of the federal and local governments, Verdi and the civil servants' association are demanding an increase of 10.5 percent. Negotiations will start there at the end of January.

The Böckler economist Schulten believes that the high demands are right: In view of the impending recession, the aim is "to maintain private demand and thus stabilize economic development as a whole.

Image by Erdenebayar Bayansan


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