Could wages in Germany be set to soar this year?

The Local Germany
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Could wages in Germany be set to soar this year?
A worker glazes wooden planks on a ship in Bremerhaven. Photo: picture alliance/dpa | Mohssen Assanimoghaddam

Economics experts believe the country's ageing population and ongoing skills gap could mean that workers in Germany are in for a pay rise.


Speaking to German daily Bild, Gabriel Felbermayr, the head of the Institute for the World Economy (IfW) in Kiel said that "the situation for workers in Germany is the best it's been in 30 years". 

According to Felbermayr, Germany's ageing population and shortages of labour mean wages could rise by around five percent on average over the next year.

In industries where employers are struggling to find enough workers, the wage increases could be even higher.


"From 2023 at the latest, the number of available workers will gradually decrease due to demographic change," he explained. "Companies will therefore vie for employees more than they have for decades."

At present, Germany has near full employment, but the desperate search for workers to fill jobs in key industries like engineering and healthcare has become a major issue for the government and business. 

In late August this year, the head of Germany's federal Employment Agency said the country was losing around 150,000 working-age people a year and needed at least 400,000 new immigrant annually to plug the gap. 

“Germany is running out of skilled workers,” Detlef Scheele told the Süddeutsche Zeitung, adding: “In the next few years, (the loss of workers) will be much more dramatic."

Cost of living on the rise

In addition to Germany's ageing population and labour shortages, Felbermayr said an increase in the minimum wage from €9.30 to at least €12 - a policy that has been taken up by parties such as the Greens and SPD - and higher inflation would also contribute to wages rising significantly more than before.

In previous years, wages have generally only risen by between 2.5 and three percent. Meanwhile, the prices of everyday items like food and household goods has been rising steeply. 


In August alone, prices rose by 3.9 percent in Germany and by three percent across the Eurozone as a whole. Experts expect this figure to keep rising in Europe, reaching a peak of around 3.5 percent in November. 

As The Local has reported in recent days, electricity and gas prices are also rising dramatically for households across Germany. 


So far, the rise in the cost of living hasn't been matched by equivalent rises in salaries, but with Germany's ongoing labour shortage woes, this could be set to change. 


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