Compared to the previous year, wages rose faster in the first quarter of 2024 than they have in a long time. But employees in Germany benefit from this in very different ways. The analysis by FOCUS online shows the winners and losers.

Successful collective bargaining and inflation compensation premiums have significantly increased the gross income of employees in Germany in the first quarter of this year: by 6.4 percent compared to the same period last year. This was reported by the Federal Statistical Office on Wednesday. Since consumer prices only rose by 2.5 percent at the same time, the wage increase was still 3.8 percent in real terms. This was the highest increase since the statistics were introduced in 2008.

Nominal wages only rose more sharply than in the current period once in the second quarter of 2023. The reasons for this were, in addition to the collectively agreed wage increases, inflation compensation premiums that employers could grant tax- and duty-free up to a maximum of 3,000 euros.

Wages rose above average, especially in sectors with a large proportion of public sector employees. There, the collective bargaining round increased wages by 200 euros plus a further 5.5 percent from March, but by at least 340 euros in total.

This means specifically:

In addition, employees with comparatively low incomes benefited most from the development.

Real wages put gross salaries in relation to the development of consumer prices. Since the final quarter of 2021, inflation in Germany had increased significantly and weakened the purchasing power of employees. Real wages fell significantly. Since mid-2023, real wages have been rising again because inflation is falling

Real wages have not yet made up for the losses since the beginning of the Covid pandemic, says economist Sebastian Dullien of the trade union Institute for Macroeconomics and Business Cycle Research (IMK). As a result, private consumption has not yet started to recover.

“After the major inflation shock of the past two years, many Germans seem to want to build up their emergency funds before spending more money again,” concludes the scientist. He expects a continued robust increase in nominal wages in the coming months, although this will slow somewhat with the elimination of inflation compensation premiums.