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Strike by Lufthansa employees last week: “The pressure is great”

Photo: Ardavan Safari / dpa

The strikes on trains and at airports in recent weeks have already indicated that the development of wages and salaries in Germany has not been able to keep pace with the recent high inflation rates. The Economic and Social Sciences Institute (WSI) of the trade union-affiliated Hans Böckler Foundation has now determined how badly inflation has affected people.

Especially in 2021 and 2022, collective bargaining wages have lost massive purchasing power. The WSI said that real collective wages in Germany were at the same level as in 2016. That was six percentage points less than at the end of 2020.

The collective bargaining negotiations in 2024 in various sectors will probably be characterized by more significant real wage increases, said WSI collective bargaining expert Thorsten Schulten. The collectively bargained employees have a lot of catching up to do to compensate for the high real wage losses.

“The pressure is great after half a decade of income improvements have been lost for many employees after adjusting for prices,” says researcher Schulten. "The severity of the negotiations will depend above all on the extent to which employers are prepared to recognize their employees' interest in real wage increases."

Inflation compensation premiums will no longer apply

According to WSI data, collective wage agreements agreed by the DGB unions for almost twelve million employees will expire between December 2023 and December 2024. Among other things, negotiations are taking place in the metal and electrical industries, the chemical industry and the construction industry.

The collective agreements in the federal and local public services will also expire at the end of the year. The need to catch up is particularly high in sectors such as the construction industry or Deutsche Telekom, said Schulten. Their last regular wage settlements occurred before the high inflation rates.

Last year, according to WSI calculations, an increase in collective wages by an average of 5.5 percent almost offset the continued high inflation of 5.9 percent. Taking into account tax- and duty-free inflation bonuses, real wages for some employees have even increased. This is an important, but only a "short-term relief in view of the price shocks caused by the Russian attack on Ukraine," says Schulten. However, if, as in many cases, they are eliminated again, they will have a “severely dampening effect on wage developments.”

In most industries, collective bargaining wages would have increased by between 4.4 percent and 7.4 percent in 2023. There were significantly higher increases in some classic low-wage sectors. They would have benefited from the sharp increase in the statutory minimum wage to twelve euros in 2022, as a result of which collective wages were also increased in some sectors. Agriculture achieved the highest growth with a nominal increase of ten percent.

April/Reuters