Germany: Real wages are declining sharply. Without stimuli or compensation there will be no growth
How does an economy grow when people's incomes are declining, and declining significantly?
The data of the real remunerations of the Germans also decreased in March in real terms, with -2.3%, and we are in the fifth consecutive month of decline in real remunerations….
What is impressive is the intensity of the decline. In reality, real wages had dropped even in the first half of the 2000s, but not with values higher than 4% as happened now.
A drop in this remuneration intensity has an effect on the economy and it cannot be otherwise. Two successive months of another 5% drop in wages, as happened in January and February, cut the legs to consumption even in a traditionally saver country like that on the other side of the Alps. No wonder contract conflict is skyrocketing, with major strikes in key sectors such as transport. Not everyone is lucky enough to have unions like the Italian ones, which are interesting for the "Fascists" and not for the wages of the employees.
Obviously, with these values of decline in real remuneration, retail sales do not grow steadily, and cannot grow. We see it in the graph below:
Small growths alternate with big drops, in a situation of decline anyway, as can be seen in the annual graph. It is no coincidence that March, the following month of decline in real wages, sees such a sharp drop in retail sales
The way out of this situation could be with a remuneration policy that would guide the real increase, realigning them, for example, at least to the values of 2020. This through a path based on programming planned in a realistic way, not like the ECB does. Obviously this route is too "social" to please the Germans, so the vicious circle of decreased income, decreased consumption, decreased growth, decreased income will continue in the future.
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The article Germany: real wages are falling sharply. Without stimuli or compensation there will be no growth comes from Scenari Economics .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/germania-le-remunerazioni-reali-sono-in-forte-calo-senza-stimoli-o-compensazioni-non-ci-sara-crescita/ on Sun, 18 Jun 2023 09:51:35 +0000.