Germany: real wages rise for the first time in two years
After a very tough period of high inflation, a mix of conditions causes real wages in Germany to start growing again.
Real wages in Germany increased 0.1% year-on-year during the second quarter of 2023, after a 2.3% decline in the previous three months.
This was the first hike in real wages since the second quarter of 2021, driven largely by a historic surge in nominal wages that effectively countered the backdrop of rising inflation, and we'll talk about the reasons for that hike shortly.
Furthermore, the disbursement of the inflation compensation bonus and the more recent increase in the minimum wage also supported the increase.
Nominal wages increased by 6.6% during the second quarter (compared to 5.6% in the first quarter), the fastest rate since the series began in 2008, while inflation fell to 6.5% in the same period (compared to 8.3% in the first quarter). Here is the chart on a ten-year horizon.
this increase is due to the combination of two factors:
- the drop in inflation, rather sharp;
- the strong increase in nominal remuneration after a period of intense bargaining, as we wrote about German railways just yesterday.
We will probably see the consequences of this wage bargaining again in the coming months, with further increases in real wages in a situation in which inflation will tend to stabilise.
This could be beneficial for the German economy, because the improvement in purchasing power should lead to an increase in household consumption, which will have a higher real income.
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The article Germany: real wages are increasing for the first time in two years comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/germania-aumentano-le-remunerazioni-reali-per-la-prima-volta-in-due-anni/ on Wed, 30 Aug 2023 06:30:14 +0000.