Germany’s 16 states are in talks with unions about higher pay for more than 2.3m public-sector workers
Average wages in Germany rose by 5.5% in the second quarter, compared with the previous year. That may in part reflect a base effect: pay fell by 4% in the same period in 2020, when the economic shock from the pandemic hit. Still, workers today are in their strongest position in 30 years, says Gabriel Felbermayr of the Kiel Institute for the World Economy, a think-tank. Bosses are chasing after skilled staff in particular.
Unions used to prefer preserving jobs to securing pay rises, and so tended to come to an agreement with bosses who were unable to afford higher wages. Things are now more fractious. Workers at Carthago, a maker of motorhomes, went on strike this week, demanding a fair share of a surge in profits from booming demand for caravans. More strikes are planned at other makers of caravans and furniture.
All told, an average wage increase of 5% next year seems “realistic”, reckons Mr Felbermayr. Pay in industries that rely on skilled workers may rise by even more. But the increases will not fan inflation further, at least not in the short term, says Mr Brzeski. Even after the rises seen so far this year, real incomes are still below pre-pandemic levels. And most firms in most industries can afford reasonable pay increases, as the state shouldered a large chunk of the cost of the pandemic.
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