Real wages in Germany plummet – data

The loss of spending power last year was driven by soaring inflation, official statistics show

Real earnings in Germany decreased by an average of 4.1% in 2022 compared with a year earlier, according to preliminary data from the statistics agency Destatis released on Tuesday.

A drop in real earnings refers to a situation where wage increases are unable to keep up with rising inflation, thus reducing spending power. Last year was the third consecutive year in which real wages declined.

“High inflation has led to the largest loss in real earnings for employees since the beginning of the time series in 2008,” Destatis wrote, noting that consumer prices jumped 7.9% last year.

Meanwhile, nominal earnings in the country increased by only 3.4% on average in 2022. This figure takes into account the gross monthly earnings of employees including extra payments, Destatis explained.

Europe’s largest economy suffered from record inflation last year due to a surge in energy prices brought about by the drop in deliveries from Russia amid Ukraine-related sanctions. Issues with pipeline maintenance and then the sabotage of the Nord Stream pipelines further exacerbated the tight supplies. Last month, Economy Minister Robert Habeck said the German economy would avoid a sharp decline but is set to enter a technical recession.

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