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WHAT CHANGES IN GERMANY

How will the cost of living change in Germany in 2022?

The pandemic, rising energy costs and higher food prices are putting a lot of pressure on households. We take a glance at the changes surrounding money and living costs that you can expect in Germany in the coming year.

A person buying groceries at a Berlin supermarket.
A person buying groceries at a Berlin supermarket. What will 2022 mean for your wallet? Photo: picture alliance/dpa/dpa-Zentralbild | Jens Kalaene

The last two years have been a challenge for many people in Germany not only when it comes to health, but also financially. 

With many industries having to close or partially shut, employees having to go on the Kurzarbeit (reduced hours) scheme and the general cost of living going through the roof, it’s been financially difficult for many people. 

But there are a few factors that suggest things will improve in the coming year and that consumers will have more money – or at least not less – in their wallets again.

What’s the outlook?

In a study published in December, Filip Vojtech from the market research company GfK predicted that in 2022 purchasing power will increase significantly for the first time since the beginning of the Covid pandemic.

The market researchers believe that consumers’ purchasing power will increase by 4.3 percent in the coming year. Even after deducting the inflation rate, which is expected to be 2.5 percent according to the forecasts of leading economic research institutes, there would still be some additional purchasing power left over.

However, economic expert Torsten Schmidt from the RWI – the Leibniz Institute for Economic Research in Essen – is not quite so optimistic. He believes that real wages will tend to stagnate in 2022. But even that would be an improvement after the noticeable decline this year.

Wage hikes for people on lower incomes

Some people can look forward to above-average increases in their pay packets. Low-income earners are set to benefit in 2021 as their statutory minimum wage will be raised on January 1st – from the current €9.60 to €9.82 per hour.

On July 1st, it will go up again by another 63 cents to €10.45 per hour. Together, this means an increase of almost 9 percent.

It may go up even more because the coalition – made up of the Social Democrats, Greens and FDP – have agreed to raise the minimum wage to €12 an hour. However, it is still unclear when this will be implemented. 

Trainees in Germany can also look forward to more money. The statutory minimum training allowance in the first year of training will increase from €550 per month to €585.

READ ALSO: What will the new German government mean for your wallet?

Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

Unemployment benefits

From January 2022, all those who are dependent on social assistance and unemployment benefit II (also known as Hartz IV) will receive – a little – more money.

The standard rate for single adults will increase by three euros to €449 per month. The rates for children and young people will also go up.

Kurzarbeit

Kurzarbeit, which allows employers to reduce hours for employees while keeping them on the payroll and has been used throughout the pandemic, has been extended to the end of March 2022.

And there are higher allowances on the cards: 70 percent of people’s monthly net salary is to be paid from the fourth month of receipt – 77 percent if they have a child living in their household. From the seventh month onwards, it will move to 80 percent (and 87 percent for a household with a child) of the monthly net salary.

Kinderzuschlag

The child supplement (Kinderzuschlag), a benefit in addition to child benefit for low-income families, will also be increased, albeit only slightly. It will go up by €4 from €205 to €209 per month per child.

Pensions

The approximately 21 million pensioners in Germany can also expect more money from July. The only question is: how much more? Labour Minister Hubertus Heil (SPD) said at the end of November that he expected “pensions in Germany to increase by 4.4 percent from July 2022.”

That sounds like a lot, but it is less than was forecast last summer – when there was talk of pension increases of 5.2 percent in the west and 5.9 percent in the east.

Electricity costs 

The German government is to lower the levy on electricity consumption from next year to help ease the burden on consumers.

The Renewable Energy Act (EEG) surcharge, used to fund the expansion of solar and wind energy plants, will fall by more than 40 percent to 3.723 cents per kilowatt hour from January 1st.

It is the largest reduction since the green levy was introduced in 2000 to help Germany transition towards cleaner energy sources.

But as The Local reported, it may be that the reduction has little impact on energy bills due to the rising prices of energy. Many people will have already received notice that their electricity costs will be going up from next year. 

How will changes impact your electricity bills? Photo: picture alliance/dpa | Sina Schuldt

Petrol and heating

Some other things are likely to become more expensive in the coming year, like filling your car up with petrol. 

At the beginning of 2022, the CO2 tax will increase from €25 to €30 per tonne of carbon dioxide emissions released by the transport and heating sectors.

The tax was introduced in January 2021 as part of Germany’s strategy to move away from fossil fuels and towards renewable energy.

According to the North Rhine-Westphalia consumer centre, the 2022 tax increase will raise the price of petrol by 1.5 cents per litre, heating oil and diesel by 1.6 cents per litre and natural gas by 0.1 cents per kilowatt hour.

READ ALSO: How households in Germany can tackle rising energy costs

Tobacco tax

Smokers in Germany will also find it more expensive: the tobacco tax for a pack of 20 cigarettes will increase by an average of 10 cents in 2022. The manufacturers are likely to pass on the higher costs to customers.

From July 1st, substances for e-cigarettes will also be subject to tobacco taxation for the first time. A 10-millilitre liquid, which currently costs roughly €5, is to be taxed €1.60 more in 2022, rising to €3.20 by 2026. Tobacco for water pipes will also be taxed at a significantly higher rate in the future.

Posting letters

There’s another slight price increase on the cards: Deutsche Post will raise the cost of posting letters and packages on January 1st. Postcards will cost 70 instead of 60 cents, standard letters 85 instead of 80 cents and other services will also become more expensive.

This is not the first price hike. In the past 10 years, post in Germany has become significantly more expensive. In 2012, sending a standard letter nationally cost only 55 cents.

READ ALSO: German postal service set to hike prices in 2022

Better rights for consumers

This is another change that should help people save money in Germany. Anyone who concludes a contract on the Internet will be able to terminate it more easily in future.

As of July 1st 2022, so-called continuing obligations (Dauerschuldverhältnisse) will need a ‘cancellation button’, which consumers can press to get rid of their contracts without having to do a lot of searching for documents and writing letters.

And from 2022 anyone who buys a product that later turns out to be faulty should have a better chance of getting their money back. Consumers will have their rights strengthened by the warranty period being extended from six months to one year.

What about the prices of everyday goods?

There is a small consolation forecast, according to experts. Overall, the inflation rate is expected to drop noticeably in 2022. In its latest economic report, the RWI estimates there will be a price increase of “only” 2.6 percent for 2022 – after an inflation rate of 3.2 percent this year.

So that means the cost of buying tomatoes, eggs and bread should ease up a bit, or at least we hope so. 

READ ALSO: Why is everything suddenly getting so expensive in Germany?

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For members

WHAT CHANGES IN GERMANY

Everything that changes in Germany in October 2022

From a nationwide public holiday and new Covid rules to changes surrounding mini and midi jobs, here's what's happening in Germany this October.

Everything that changes in Germany in October 2022

Reunification Day

Germany will celebrate the Day of German Unity, or Tag der deutschen Einheit, on Monday October 3rd.

It marks the day that the the German Democratic Republic (GDR) officially ceased to exist as a sovereign state and rejoined the Federal Republic of Germany in 1990. Since then, Germany has been reunited as the Bundesrepublik and the date is celebrated every year with a holiday in every federal state.

This year it’s 32 years since east and west reunified. Because it’s a public holiday, most workplaces as well as shops and other businesses are closed. 

READ ALSO: Which public holidays are coming up in Germany?

New Covid rules

A new set of Covid rules based on the amended Infection Protection Act will come into force from October 1st. 

The rules will apply until April 7th next year. We have a short round up of some of the bigger changes below, but check out our key points article for more information. 

READ ALSO: Key points – Germany’s new Covid rules from October

Mask mandate changes

Under the new regulations, people travelling on long-distance trains in Germany will have to wear an FFP2 mask if they are over the age of 14. Children aged between six and 13, can wear a surgical mask.

A mask mandate is also in force nationwide in hospitals, nursing homes and doctors’ offices. In nursing homes and clinics, a negative Covid test has to also be shown when visiting. 

Masks will no longer have to be worn, however, on flights to and from and within Germany. 

Further requirements, such as the obligation to wear masks in shops, restaurants or event rooms, can be imposed by the federal states – depending on the incidence of infection. Tests may be required in schools and daycare centres.

States are expected to continue with the mask mandate order on local public transport.

Health Minister Karl Lauterbach holds an FFP2 mask

Health Minister Karl Lauterbach holds an FFP2 mask. Photo: picture alliance/dpa | Michael Kappeler

Covid safety plans at work – but no mandatory ‘home office’

Employers do not have to offer their staff the opportunity to work from home. But bosses should consider this, as well as regular Covid testing, as an option for employees as part of Covid safety plans. 

A draft law by Labour Minister Hubertus Heil (SPD), which called for mandatory home office rule during the winter months to help with the Covid situation, was toned down after coalition partners, the FDP pushed for a change.

Vaccination status changes

There are changes coming up when it comes to what counts as being fully vaccinated in Germany. In general, people will need three jabs to be classed as fully vaccinated from October. 

Vaccination certificates issued after two shots will only be considered as proof of full vaccination until September 30th. Beginning October 1st, a booster jab (i.e., a 3rd vaccination) is generally required to be considered “fully vaccinated”. Alternatively, two vaccinations and proof of recovery from Covid-19 will also qualify. 

READ ALSO: Germany’s planned changes to Covid vaccination status

However, keep in mind that there is no planned vaccination/test requirement to enter indoor public areas in Germany – previously known as the 3G or 2G rules.

If a German state government imposes a mask requirement indoors, then people simply need to wear a mask to enter indoor settings such as bars, restaurants, cultural and recreational venues. People who present a negative Covid test would be exempt from wearing a mask. However, regions can also choose to exempt the freshly vaccinated or recently recovered people from the mask requirement. In that case, people would have to show proof. However, not all states have to bring in this exception.

A person is considered recovered from the 29th day after detection of infection and for a maximum of 90 days. The ‘recovery’ proof can be provided by a PCR test.

Mini-jobbers can earn more

On October 1st, the upper earnings limit for people with so-called mini-jobs will rise from €450 to €520 per month. There will also be changes for employees in midi-jobs, who were previously allowed to earn between €450 and €1,300 per month: the limit will shift to between €520 and €1,600 from October.

READ ALSO: The rules in Germany around mini and midi jobs

A member of staff at a cafe in Stuttgart.

A member of staff at a cafe in Stuttgart. Photo: picture alliance/dpa | Bernd Weißbrod

Minimum wage boost

On October 1st, the statutory minimum wage in Germany will be raised to €12 per hour. It was raised to €10.45 at the beginning of July.

VAT on gas usage to be slashed

Energy prices are currently going through the roof. As a result, the German government has decided to reduce the VAT rate on gas consumption from 19 to 7 percent. The reduction in VAT was intended to offset the controversial gas levy – however, that levy is being shelved. 

READ ALSO:

Property tax deadline 

From 2025, a new property tax calculation will apply in Germany. For this to happen, almost 36 million properties in Germany are being revalued on the basis of information that owners submit.

That means people owning property in Germany have to submit a new declaration to the tax office based on values as of January 1st 2022. Owners have until October 31st of this year to send in updated information electronically via the Elster portal to the tax office.

Commercial tax programmes that offer an interface to Elster can also be used. People who do not have Internet access can also have the declaration prepared by relatives. In exceptional cases, a declaration in paper form is also possible by making a request at the tax office.

READ ALSO: The German property tax declaration owners need to know about

An aerial view of flats in Munich.

An aerial view of flats in Munich. Photo: picture alliance/dpa | Sina Schuldt

An extra hour in bed

Don’t forget that the clocks go back this October. 

During the night from Saturday October 29th to Sunday October 30th, clocks in Germany will be set to winter time. At 3am the clock will go back one hour, to Central European Time (CET).

The good news is that we all get an extra hour of sleep (or partying). The bad news is that it’s going to get darker earlier in the evening. 

Driving test questions

People learning to drive in Germany will see a few changes. Starting October 1st, the questions for the theoretical driver’s license exam will change. New questions will be added, while older questions revised. In total, the test contains 52 questions.

No more WhatsApp for older iPhones

From October 24th, the messenger service WhatsApp will no longer be supported on Apple smartphones with an iOS operating system 10 and 11. Apple users must have at least iOS 12 installed from this date to continue using WhatsApp.

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