Real wages in Q1 2023 down 2.3% year-on-year

Press Release #206 dated May 30, 2023

• The average wage increased by 5.6% during that period
• The highest wage increase since the start of the hourly series in 2008
• High inflation (+8.3%) continues to more than eat up wage growth

WIESBADEN – In the first quarter of 2023, average wages in Germany increased by 5.6% compared to the same quarter of the previous year. This is the highest wage increase measured for a reporting quarter since the start of the time series in 2008. Consumer prices rose 8.3% during the period. As the Federal Statistics Office (Destatis) reports, real wages decreased by 2.3% in the first quarter of 2023 compared to the same period of the previous year. So the trend from 2022 continues: Higher inflation than eats up wage growth for workers at the beginning of 2023.

Inflationary compensation payments have slightly offset the loss of real wages

The disproportionate increase in nominal wage growth in the first quarter of 2023 has somewhat offset the loss of real wages for workers at the start of the year compared to the previous three reporting quarters. The payment of inflationary compensation also contributed to reducing the loss of workers’ purchasing power. This can reach up to 3,000 euros (tax-free and tax-free) and is a voluntary benefit from the employer.

Underemployment and benefits above the average regular wage

If you look at workers according to their type of employment, the underemployed by 8.9% show a significant increase in average wages in the 1st quarter of 2023 compared to the same period of the previous year. This is mainly due to the increase in the income limit for small jobs from 450 euros to 520 euros, which has been in effect since October 1, 2022. The regular wages of part-time workers also increased slightly above average by 5.9%. For part-time workers and apprentices, a wage increase of 4.7% was recorded in the 1st quarter of 2023.

Technique tips:

The standard wage index shows the development of monthly earnings including special payments from all employees. Inflation compensation payments are included in the income figures as part of the total gross salary. It is not defined as a special payment (other payment) within the meaning of the Wage Information Law, as it is tax-free and tax-free. For this reason, payments are shown at the same level in both income indices with special payments and income indices without special payments.

Changes to income indices from the 2023 reporting year:

The data source for income indices since 2022 is the new income survey. It replaces the quarterly income survey and provides higher quality results. Since 2022, for example, small companies (up to ten employees) have also been recorded and, in addition to part-time, part-time and part-time workers, all other types of employment such as trainees and retired workers. are also displayed. In addition to economic sectors B to S (manufacturing and service sectors), economic sector A (agriculture) is now also covered (classification of economic sectors, 2008 edition (WZ 2008)). The income indices and their rates of change from the reporting year 2023 therefore contain a more comprehensive picture of the German economy than ever before.

Additional information:

More background information and time series on real and nominal wages can be found on the “Real wages and real earnings” topic page and in the GENESIS database.Online (Table 62361) found.

In addition to annual and quarterly income indices, monthly income indices from 2022 with year-over-year change rates from 2023 are now available in the GENESIS database.Online (Table 62361) is available. In addition, the monthly wage index by quintile and type of employment is now also available in the German dashboard. www.dashboard-deutschland.de found.