NewsA challenging year for German workers. Some Germans have genuinely become poorer

A challenging year for German workers. Some Germans have genuinely become poorer

Some Germans have actually become poorer this year.
Some Germans have actually become poorer this year.
Images source: © Getty Images | LEONHARD SIMON
ed. KRWL

6:04 AM EST, December 11, 2023

Despite experiencing falling inflation and wage increases, many Germans may feel they are poorer due to the declining purchasing power of their wages. The German economy is grappling with several issues, including a noticeable worker shortage.

The WSI institute and the Hans Böckler Foundation report that, even with a slowdown in inflation and wage increases negotiated under new collective agreements, many Germans are expected to witness a decrease in their purchasing power this year, as reported by.

Fall in inflation in Germany

The newspaper cites estimates indicating that collectively agreed wages in Germany nominally rose by 5.6 percent this year. However, due to a projected annual inflation rate of 6 percent, average wages are expected to decrease by 0.4 percent.

Thorsten Schulten, head of the collective agreements department at the WSI Institute—a center for information on union politics in terms of negotiating collective agreements—explained that the purchasing power of employees under collective agreements could have been nearly guaranteed, according to the newspaper.

However, significant losses in real earnings from the past two years have not been erased. Though wage increases were cemented in collective agreements, prices have outpaced wages in 2021 and 2022.

Due to the worker shortage, the German economy is under strain. The head of the employers' union asserted that this may impact our wellbeing.

WSI experts emphasized that their predictions for 2023 do not entirely account for the effects of certain measures implemented to counterbalance inflation across several sectors.

Inflation bonuses prove beneficial for Germans

For some workers, the financial outcome may be more favorable according to the newspaper. In numerous sectors that have brokered new agreements, one-off payments covering inflation have not only preserved real wages but have induced significant growth in certain instances.

Schulten highlighted that such payments could significantly curb wage growth when they cease in subsequent years. However, these inflation bonuses have a beneficial social aspect, particularly favoring individuals from lower-income groups.

Considering the significant slowdown in inflation, Schulten predicts that demands for higher wage increases should lessen in 2024, especially during the negotiation of new collective agreements, according to the newspaper.

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