Data published by the Federal Statistical Office (Destatis) showed that in the 1st quarter of 2024, real wages increased by 3.8% per annum. This was the fourth consecutive quarterly increase and the strongest growth since the beginning of the compilation of these statistics (since 2008). The last time such a strong increase in real wages was recorded was in the second quarter of 2021 (+3.2% compared to the second quarter of 2020).
Destatis also stated that nominal wages increased by 6.4% per annum in the 1st quarter. This was the second largest increase in the entire history of observations. Consumer prices increased by 2.5% per annum over the same period. Overall, the data marks a changing trend for Germans who saw their wages decline across the board in real terms from late 2021 until the first quarter of 2023.
Experts said that a significant increase in nominal wages and lower inflation rates led to an increase in real wages in the 1st quarter of 2024. This was also facilitated by the payment of compensation premiums for inflation. The bonus, without paying taxes and fees, can be up to 3,000 euros and is a voluntary employer benefit that can be paid by the end of 2024. Wage increases and lump-sum payments, as well as inflation compensation bonuses in collective agreements, which were paid to many workers in the 1st quarter of 2024, also played an important role in raising real wages. If we consider full-time employees in accordance with their category of earnings, then in the 1st quarter the largest increase in earnings was observed in the fifth with the lowest earnings - the average nominal salary increased by 8.8% per annum. The total earnings of full-time employees increased by 6.5%. As for the category of "the highest earnings among full-time employees", the nominal salary growth amounted to 5.7% per annum.
"The recovery in purchasing power should contribute to an improvement in consumer demand in the coming months. Therefore, consumption can become an important pillar of economic recovery," said Sebastian Dullien, a senior economist at the IMK institute.