Germany records highest increase in real wages since 2008

Real wages in Germany in the first quarter rose by 3.8 percent on the same quarter of last year, the Federal Statistical Office (Destatis) said Wednesday. It was the strongest year-on-year growth since the time series began in 2008.

Employees in the country had seen "real wage losses across the board" for more than a year until early 2023, the Destatis added.

The real wage growth in the first quarter was a result of a weakening inflation trend and a strong increase in nominal wages, which were up 6.4 percent. Inflation compensation bonuses also contributed to the growth, said the Destatis. Germany currently allows a tax and duty-free bonus of up to 3,000 euros (3,240 U.S. dollars) per employee to counter high price levels.

Consumer sentiment in Germany meanwhile continues to recover. The monthly index by market research institute GfK and the Nuremberg Institute for Market Decisions (NIM) went up by 3.1 points for June, although the overall climate remained negative at minus 20.9 points.

"Falling inflation rates combined with considerable wage and salary increases strengthen consumer purchasing power," said Rolf Buerkl, consumer expert at NIM on Wednesday. Nevertheless, a lack of clear future prospects in the country still undermines consumers' planning certainty when making purchases," he added. (1 euro = 1.08 U.S. dollar)

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