Germany: on course for higher salaries

Several signs suggest that Germany could be starting on a course for rising salary levels. With domestic inflation now at the high end of the Eurozone average, (7.4% April, 7.3% March) wage increase demands are accordingly on the rise. In the week 25 April, the German Trade Union Confederation (DGB) announced that higher salaries would be its main objective for 2022. Marcel Fratzscher, president of the renowned German Institute for Economic Research (DIW), said wage adjustments are “absolutely necessary” to compensate for the sharp rise in prices. While the chemical industry recently decided to postpone sector wage negotiations until October 2022 by way of a onetime €1,400 ‘bridging bonus’, which still effectively represents an average ‘increase’ of around 5.3% over 7 months, IG Metall has just announced that it is demanding an 8.2% increase for its steel industry workers (close to 100,000) in both the north-west and east of the country. The services union Verdi is demanding a 6% salary increase for the 50,000 employees at Deutsche Telekom. In the retail sector, discount retailer Aldi has just announced that it will raise its minimum wage by 12%, from €12.5 to €14, starting in June. Lastly, on 28 April, the first reading of a law raising the universal minimum wage to €12 (c.f. article No.12877), a campaign promise by Chancellor Olaf Scholz, was debated in the Bundestag when conservative MPs who had backed the planned two-stage increase from the current €9.82 to €10.45 in June and then to €12 in October, unexpectedly supported fast tracking the rise to €12 by June.