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Working in Germany: 7 factors that can affect how much you’re paid

Wondering if there's a way of boosting your pay packet in Germany? We recommend considering these points if you're navigating the German job market.

A man works at a table in Munich.
A man works at a table in Munich. Photo: picture alliance/dpa | Finn Winkler

According to a study by Gehalt.de, employees in Germany earn a median salary of around €43,200.

But all kinds of factors can have an impact on how much you earn, whether it’s the type of company you work for or where you live in Germany. 

Here’s a look at some points to keep in mind. 

1. The size of the company

The bigger the company, the better you will be paid. That’s because firms with many employees usually have a larger turnover and can afford to pay more because of their positive balance sheet.

According to an analysis by Gehalt.de, companies with more than 500 to 1,000 employees in Germany pay out an average income of €57,000 per year. A micro-enterprise or small firm with up to five employees offers an average salary of €35,000.

Meanwhile, the income of a company with more than 20,000 employees can increase by up to 85 percentage points – with an average salary of about €80,000, according to the study. 

READ ALSO: How to boost your career chances in Germany

2. The economic situation of the company

It goes without saying that the salary also reflects how well the company is doing economically.

A company that’s not doing so well, and whose turnover tends to fall from year to year, will not be able to pay its employees too large a salary and will also seldom allow salary jumps. 

3. Your education

Your school career, as well as your choice of field of study, can have significant impact on your salary, especially for younger employees. Later, work experience and performance in the respective company take on a more important role.

But as many of us who have settled in Germany know, this is a land obsessed with academic titles.

Many people strive to get ‘dr’ or ‘professor’ in front of their name, and for good reason: having academic achievements can increase your earning potential, as well as your societal clout (but just don’t plagiarise your doctoral theses like many German politicians have). 

In the working world, banks and consulting companies like their employees to have titles attached to their names, while some industries (like medicine) may require them. 

According to the job platform Stepstone, academics earn on average about 30 percent more than non-academics. Among them, graduates in medicine and law can expect the highest earnings, averaging over €72,000 a year.

The same applies to people who have studied industrial engineering, business informatics and engineering.

However, those who have not studied or earned a doctorate can also score points with years of professional experience: after 11-20 years in an industry, you can expect to be paid around 67 percent more than at entry level.

Furthermore, soft skills are indispensable for top pay these days.

These include speaking skills, organisational talent and the ability to work in a team. You can learn or grow these skills through special courses and training.

If you speak more than two foreign languages, you will also gain further advantages in the global job market (and perhaps even at home in Germany). 

4. The sector

Your choice of industry has a big impact on your salary.

According to the Federal Statistical Office, employees working in financial and insurance services as well as IT sectors earn the most. Employees there received €5,248 to €5,602 per month (gross) on average in 2020.

People working in the hospitality industry earned the least, with average gross earnings of €1,893 per month.

5. Where you live

The area you live in Germany will affect your pay packet. 

According to the Salary Atlas 2021 by Gehalt.de, employees in southern Germany earn above average.

Baden-Württemberg is at the top with a median income of about €46,600 euros, which means that employees there earn almost eight per cent above the national average.

There are also attractive salaries in Hesse (€46,300) – which is home to the banking capital of Frankfurt – and Hamburg (€45,600).

At the other end of the ranking are the eastern states: in Mecklenburg-Western Pomerania (€33,700), Saxony-Anhalt (€34,800) and Brandenburg (€35,100) in particular, annual earnings are comparatively low.

But the cost of living is higher in the larger cities so keep that in mind when you’re considering where to find a job. 

The situation is similar for the salaries of executives. The front-runner here, however, is Hesse, not least thanks to the position of Frankfurt am Main as an influential financial centre. At €100,400, Hessian decision-makers can even expect a median income in the six-figure range.

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6. Your role or occupation

Regardless of the location, the choice of profession also makes a huge difference to your salary, and how your salary can develop. 

Those who want to be among the top earners in Germany should consider their profession carefully.

According to the salary atlas experts, the top positions are filled by chief physicians (€196,250) and senior physicians (€121,700).

Financial experts, lawyers, management consultants and IT experts follow in the ranking. But it can take a lot of years to get into these positions. 

A high degree of responsibility as well as sound specialist knowledge and often years of training are required. 

7. Responsibility

As well as the occupation, the position and associated responsibility in the company also play a central role when it comes to pay.

Managers earn significantly more than employees – and the larger the team you manage, the higher the pay usually is.

Useful vocabulary 

Salary – (das) Gehalt

Company size – (die) Unternehmensgröße

Small company – (das/die) Kleinstunternehmen

Influence/impact – (der) Einfluss

Average – (der) Durchschnitt

In comparison – im Vergleich

Employees – (die) Beschäftigte/Mitarbeite

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STRIKES

Major German trade union wins pay hike, averting strikes

Germany's biggest trade union agreed Friday on wage hikes totaling 8.5 percent that are expected to cover almost four million workers facing soaring inflation, averting a major strike in Europe's top economy.

Major German trade union wins pay hike, averting strikes

The deal will be closely watched across the continent, which is facing spreading industrial action as employees demand large pay increases to cope with rising costs, particularly of energy.

The agreement between IG Metall union – which represents workers in Germany’s key metal and electrical sectors, and is seen a trend setter for setting wages nationwide – was reached early Friday after weeks of talks and walkouts.

The so-called “pilot agreement” in the southern state of Baden-Württemberg, which is expected to eventually cover about 3.9 million workers across Germany, lays out how the pay increase will be introduced in two stages, in 2023 and 2024.

It also includes a €3,000 payment to combat the impact of inflation.

“Employees will soon have significantly more money in their pockets – and permanently,” said Joerg Hofman, president of IG Metall.

The union had initially called for an eight percent increase over 12 months, the biggest hike since 2008.

Its members are from a vast range of key businesses, from automotive to electronics.

Workers have been ratcheting up pressure – with demonstrations, and a series of “warning strikes” at the end of October, which are walkouts for a limited duration, which often accompany salary negotiations in Germany.

READ ALSO: German industry workers to strike from Saturday

If no deal was reached, then the union was poised to launch more serious strikes lasting 24 hours.

While companies are under pressure to hike wages to cope with rising costs, there are fears that raising them too sharply could stoke already sky-high inflation.

READ ALSO: Jobs in Germany: Should foreign workers join a union?

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