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WORKING IN GERMANY

Inflation wipes out high wage increases in Germany last year

Germany's Federal Employment Agency (BA) recorded a significant rise in wages last year - but not enough to compensate for high inflation.

Published: 25 July 2024 15:20 CEST
Euro notes and coins
Euro notes and coins. Photo: picture alliance/dpa | Monika Skolimowska

The median salary of all full-time employees subject to social security contributions in Germany was €3,796 per month in 2023.

Compared to 2022, wages and salaries have therefore risen by an average of €150 euros – or 4.1 percent.

According to BA, this rise can partly be explained by a spate of strike actions and collective bargaining last year. With the cost of living rising significantly, workers across several industries fought for high pay increases to compensate for inflation. 

However, despite some wins for Germany’s major unions, significant inequalities in earnings still remain, particularly when it comes to gender and location. 

While the median salary for men was just over €3,930 in 2023, women earned around €3,563 – a difference of €367. This was a slight increase compared to 2022, but shows an improvement compared to 2019, when the difference was €443.

READ ALSO: Five things to know about salaries in Germany

In terms of regional differences, the northern port city of Hamburg had the highest-earning residents while just down the coast in Mecklenburg Western-Pomerania, people earned the lowest. 

The highest median salaries were achieved by full-time employees in Hamburg at €4,304, followed by well-heeled Baden-Württemberg at €4,134 and Hesse at €4,087.

On the other end of the spectrum, three former East German states had the lowest-paid employees. In Mecklenburg-Western Pomerania, the median salary was €3,098, in Thuringia it was €3,109 and Saxony-Anhalt it was €3,152.

How much employees earned also depended heavily on their qualifications.

While people without a vocational qualification earned €2,831 on average, employees with a recognised vocational qualifications earned €3,658. Graduates were among the highest earners, taking home a median salary of €5,688 per month.

READ ALSO: The best-paid jobs you can get without a university degree in Germany

Pay also tends to increase as employees get older, BA reported.

Employees under 25 earned €2,897 on average, while 25 to 54-year-olds earned €3,860. Median salaries for employees over the age of 55, meanwhile, stood at €3,954 per month.

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For members

MONEY

Why Germany will not raise unemployment benefits next year

Bürgergeld allowance - the long-term unemployment benefit - will not be increased next year, the German government says.

Published: 5 September 2024 10:56 CEST
Why Germany will not raise unemployment benefits next year

The coalition government usually raises the Bürgergeld allowance – which those who are long-term unemployed receive – at the turn of the year.

But according to Labour Minister Hubertus Heil, of the Social Democrats (SPD), the falling inflation rate means there will be no increase in 2025.

Inflation fell to 1.9 percent in August – the lowest level in more than three years. “And that’s why the figures and the legal mechanism mean that, as predicted, there will be no increase in ‘citizens’ benefits’ on January 1st,” Heil said. “And that is the right thing to do.”

Heil said people in Germany who are not in work must be supported. “But it is also clear that this is the minimum subsistence level, no more, no less,” he added.

When the first tier of unemployment insurance runs out in Germany – typically after one year of not working – Bürgergeld (known as Unemployment II) kicks in at a fixed amount. 

At the moment, Bürgergeld recipients can expect €563 per month along with the payment of other living expenses and housing. The monthly payment was increased by 12 percent at the start of this year. 

However, that was controversial to the SPD’s coalition partners, the Free Democrats (FDP). Justice Minister Marco Buschmann (FDP) had recently even brought a reduction of the payment into play – but this was swiftly rejected by the Labour Ministry. 

The FDP has also been pushing for tougher sanctions on benefit recipients, which the coalition has put together a plan for. 

READ ALSO: How the German government wants to toughen up rules on unemployment benefits

This comes amid budgetary pressures. The coalition is debating how to make savings in the coming year’s budgets. 

What’s the reaction?

The move has been met with some opposition. The German Parity Welfare Association (Paritätische Wohlfahrtsverband) said the decision was a “step backwards”.

“Bürgergeld is still far too low, prices are continuing to rise and not increasing it would be a step backwards in terms of social policy,” Chief Executive Joachim Rock told Redaktionsnetzwerk Deutschland.

“Just because the inflation rate is falling does not mean that the burden is also falling.”

READ ALSO: How generous is Germany’s unemployment benefit system?

Rock also criticised the methods used by the government to calculate the rate and called for inflation to be compensated for. According to the association, the standard rate of €563 for a single adult means “a healthy diet, adequate mobility and social participation regularly are not possible”. 

Rock repeated the association’s previous demand for an amount of €813 per month to be given to Bürgergeld recipients. 

The welfare association also rejected the FDP’s criticism that the last increase of Bürgergeld was too high and a reduction was necessary.

“People who receive the ‘citizen’s allowance’ have no savings or savings accounts with which they can bridge emergencies,” Rock said. 

Around 5.5 million residents in Germany receive the Bürgergeld benefit.

READ ALSO: Can I get unemployment benefits in Germany if I quit my job?

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