German wages barely increase in 2021 despite skyrocketing inflation By Reuters
Â© Reuters. FILE PHOTO: Passengers wear face masks while waiting for an S-Bahn commuter train on the platform of Friedrichstrasse station during lockdown amid the coronavirus disease (COVID-19) pandemic in Berlin, Germany, February 5, 2021. REUTERS / Fabrizio Bensch / Fil
BERLIN (Reuters) – German collectively agreed wages have barely risen this year despite surging inflation, data showed Thursday, effectively leaving consumers with less money in their wallets, which could hurt future spending by consumers. households in Europe’s largest economy.
The Federal Statistical Office said the negotiated wages of unionized employees increased by an average of 1.3% compared to the year 2021, the smallest increase recorded since the office began compiling the data in 2010. .
While consumer prices are expected to rise 3% this year, workers have suffered a real drop in real wages.
Central bankers and policymakers are monitoring wage developments in the euro area very closely. They are looking for clues as to whether rising consumer prices lead to higher wages, which could mark the start of a wage price spiral and lead to higher inflation also in the medium term.
Falling real wages do not bode well for future household spending which was the sole driver of gross domestic product growth in the third quarter given supply bottlenecks and production issues in the sector. industrial.
Restrictions aimed at breaking a fourth wave of coronavirus infections are likely to hurt retail sales and business in the service sector, wiping out Germany’s last pillar of growth in the last quarter of this year.
The new chancellor, Olaf Scholz of the center-left Social Democrats, has pledged to raise the national minimum wage by around 25% to 12 euros an hour next year.
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