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High inflation dampens real wage growth in Germany

2021-09-22T14:26:48.436Z

In the spring, wages in Germany rose more sharply than they have been in a long time. The loss of earnings due to the corona pandemic has not yet fully made up for this. Because prices are also rising.



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Passers-by in Potsdam: The corona crisis is having an impact

Photo: Michael Kneffel / imago images

First of all, it is good news for employees in Germany: wages rose more sharply in the spring than they have been since at least 2007.

Nevertheless, the bottom line is that the employees have not yet earned as much as before the corona crisis, as the Federal Statistical Office announced.

Nominal wages - i.e. gross monthly earnings including special payments - were 5.5 percent higher between April and June than in the same quarter of the previous year.

Since consumer prices climbed by 2.4 percent at the same time, this results in a real increase in earnings of around 3.0 percent.

Both increases are the highest since the start of the data series in 2007. "This overcompensated for the nominal wage losses of 4.0 percent from the second quarter of 2020," said statistics expert Susanna Geisler.

"However, the significant rise in inflation has meant that employees are not yet earning as much in real terms as they were before the crisis."

Above all, the decline in short-time work and the associated increase in weekly working hours in the second quarter caused gross wages to rise.

The short-time work allowance paid by the Federal Employment Agency does not count towards gross earnings and is therefore not recorded in the statistics.

Overall, the paid weekly working hours of full-time employees increased by an average of 4.2 percent to 38.3 hours compared to the same quarter of the previous year.

However, this has not yet reached the pre-crisis level: In spring 2019 this value was 39.2 hours.

The wages rose the most for unskilled and semi-skilled workers this spring with 9.3 percent each.

In the same quarter of the previous year, however, these groups also had the largest drop in earnings (minus 7.4 percent and minus 8.9 percent), so that there was a catch-up effect here.

Outstanding skilled workers (4.6 percent) and employees in management positions (3.4 percent) recorded below-average increases in earnings.

A year ago, however, they were also less affected by falling earnings (minus 2.4 percent and minus 2.0 percent).

mmq / Reuters / dpa

Source: spiegel

All business articles on 2021-09-22

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