Tax-free one-off payments: The joker in the crisis
Created: 09/24/2022, 13:52
Prof. Michael Hüther: The doctor of economics (born in 1962) has been the director of the employer-oriented Institute of German Economics (IW) in Cologne since 2004.
© N. Bruckmann/M.
Litzka/dpa
The German economy is heading for a recession due to rising costs for energy and commercial products - and a wage-price spiral, warns Prof. Michael Hüther from the German Economic Institute in the guest article.
In view of this initial situation, the trade unions are now responsible, writes the head of the employer-related institute.
Cologne - The energy crisis and its consequences are the dominant topics of the hour.
As a result of the exploding prices for gas, electricity and oil, raw materials, preliminary products and other commercial products are becoming more expensive.
The Federal Statistical Office reports inflation rates that are reminiscent of the oil price shock of the 1970s and beyond.
In this mixed situation, trade unions are demanding high wage increases - and at the same time admit that the challenges cannot be solved by the collective bargaining parties alone.
In addition to the tensions resulting from the Russian war against Ukraine, many companies are still struggling with the consequences of the corona pandemic, are unable to fill vacancies and are thus struggling with demographic change.
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It is quite certain that the German economy will find itself in a recession in the coming year.
The Bundesbank is expecting a significant downturn in the fourth quarter of this year and in the first quarter of 2023, and is also anticipating inflation rates of ten percent and more.
High wage agreements can fuel them further, a price-wage-price spiral threatens.
Tax-free one-off payments as jokers
In this difficult situation, tax-free and non-contributory one-off payments can be the joker, which at least helps to slow down a further increase in inflation, instead of risking the cost-effectiveness of companies with table-based wage agreements.
more on the subject
ECB: What is important when fighting inflation
The end of the free lunch: the ECB before the crucial test
200 billion euros more for energy: Germany is threatened with recession
Tax-free one-off payment brings a substantial increase in wages
The federal government wants to pave the way for this and will waive tax and social security contributions for special payments of up to 3,000 euros this year and next.
A full-time employee with an average gross annual salary of 49,200 euros would have a wage increase of 6.1 percent with a tax-free one-off payment of 3,000 euros, with a one-off payment of 1,500 euros it would still be a good three percent.
From the company's point of view, the instrument has charm: wage costs do not rise permanently.
At the same time, there is less risk that rising unit labor costs will drive up prices across the board and tighten the restrictive monetary policy of the European Central Bank.
As a reminder: After the first oil price shock in the 1970s, unit labor costs, which had already risen sharply before, led to a wage-price spiral that could only be stopped by decisive intervention by the Bundesbank, from which the economy suffered at the time - a stabilization recession set in.
trade unions have a duty
It is now up to collective bargaining to pick up the ball and prevent the past from repeating itself.
Trade unions have the thankless task of not passing on the loss of prosperity caused by high energy prices to companies, but of accepting it.
In difficult times, everyone has to pull together.
About the person: Prof. Michael Hüther holds a doctorate in economics (born in 1962) and has been the director of the employer-related Institute of German Economics (IW) in Cologne since 2004.
