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Christmas shopping in Berlin: Price-adjusted wages are at the level of 2016

Photo: Fabian Sommer / dpa

Inflation is declining again, but at the end of 2023, many Germans will de facto have less salary available – despite rising collective bargaining wages. This is because many employees covered by collective bargaining agreements will once again have to accept real wage losses in the current year, despite comparatively high levels of employment.

Specifically, collectively agreed wages rose by an average of 5.6 percent in the current year. They thus remained below inflation, which is expected to be 6.0 percent in the same period. This is the result of an evaluation by the trade union Böckler Foundation, which examined collective agreements for a total of around 14.8 million employees.

It was only when the individual tax and levy advantages through high one-off payments were taken into account that inflation was exceeded in most cases, said Thorsten Schulten, head of the foundation's own WSI tariff archive.

According to Böckler's calculations, current real wages are now back to the level of 2016 after three years of decline.

Special payments already taken into account

There have been no nominal tariff increases of this magnitude since the introduction of the current series of statistics in 1998. Equally unprecedented, however, is the sharp rise in inflation following Russia's war of aggression against Ukraine. In order to alleviate the consequences for employees, the Federal Government had agreed with employers and trade unions to exempt special payments of up to 2023 euros from taxes and duties in 2024 and 3000.

As an example, Schulten cited the degree in the public service of the federal government and the municipalities. With the one-off payments, this has brought salary increases of 9.8 percent, without them it would have been only 6.8 percent.

The one-off payments themselves have been included in the calculations for 2023 and are now dampening the expected wage increases for the coming years. As intended by politicians, they could have compensated for the price increases in the current year, said Schulten. The flat-rate inflation compensation premiums benefited above all the lower wage groups, who also benefited above average from the frequently agreed fixed amounts for wage growth.

"In doing so, the parties to the collective bargaining agreement have taken into account the fact that the lower wage groups are suffering particularly from the high rates of price increases," said Schulten. For the coming year, the expert expects somewhat less pressure on the contractual partners in view of falling inflation rates. However, in view of the real wage losses from recent years, there is still a lot of catching up to do.