Inflation and wage increases are at present equally high

From the more in the purse, wage workers in Germany can no longer buy due to the inflation rate. But this only slightly tarnishes the consumer sentiment.

Inflation and wage increases are at present equally high

The wages and salaries of employees with collective agreements increased by 2.0 percent in second quarter of this year, as Federal Statistical office in Wiesbaden shared. But because inflation has also increased at this rate, re is currently no real improvement in growth of workforce. Inflation in Germany consumes wage increases of collective workers completely.

Higher prices, such as energy, fuel and food, as well as low interest rates, also ease consumer sentiment. For September, Society for Consumer Research (GfK) predicts a slight deterioration in consumer climate compared to previous month, but corresponding index will only decrease by 0.1 meters to 10.5 points. At present, consumers are no longer ready for larger expenditures as quickly as y can.

"People see that y have little interest in ir financial assets, but on or hand y have to reckon with a two-percent devaluation of money," says Rolf Bürkl of GfK. However, consumer economy is expected to remain stable 2018 because of low unemployment, says Bürkl. Only a few people were afraid of a job loss.

Merits have actually been stronger for years than consumer prices

According to Federal Statistical Office, exception is that inflation absorb wage increases of collective workers. In wake of economic upturn, earnings have risen more than consumer prices for years, according to authority, especially since 2013, re have been strong real increases. Only at end of 2017 were wage earnings lagging behind inflation.

Not all industries, however, are just same as inflation rate: in construction sector (plus 5.1 percent), in industry (3.7), and in trade and hospitality (3.3 each), employees remained more in spite of increased inflation rate. The look-out had wage bargaining at banks and insurance companies (plus 0.8) and in areas of art, entertainment and recreation (0.6), y had to accept real salary losses.

More and more less collective workers

However, increasingly fewer federal citizens are remunerated according to industry agreements. In year 1996, according to Institute for Labour Market and vocational research, re were still 70 percent of all West German workers, but in 2017 only 49 percent.

In East Germany, proportion of people paid by tariffs decreased from 56 to 34 per cent in total number of employees over same period. In service sector in particular, re are experts who have many small firms in which trade unions and collective agreements do not play a major role.

Date Of Update: 30 August 2018, 12:00

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