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German wages rise strongly for third year in row

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German wages rise strongly for third year in row
Photo: DPA
14:45 CET+01:00
German workers enjoyed a strong increase in wages for the third year in a row in 2016, official data showed Thursday, in news likely to be welcomed by the European Central Bank.

Real wage growth stood at 1.8 percent last year, the federal statistics authority Destatis said in a statement, confirming preliminary results released in February.

That was slower than the record 2.4 percent increase recorded in 2015 and the 1.9 percent rise the year before.

To give a clearer picture of the development in workers' purchasing power, the statisticians calculate the real wage growth figure by subtracting inflation - at 0.5 percent over the whole year - from the nominal increase in salaries of 2.3 percent.

Rising inflation towards the end of the year meant that real wage growth slowed in the fourth quarter to just 1.1 percent, after a peak of 2.7 percent between January and March.

"As in the previous year, employees with below-average monthly earnings received above-average nominal increases," Destatis commented.

Untrained workers, the "marginally employed" earning less than €450 per month, and employees in the hospitality sector saw their wages rise faster than other groups.

Growing wages in Europe's largest economy will be welcome news for the ECB.

Paying workers more should boost consumer spending, powering the eurozone economy and driving inflation towards the ECB's target of just below 2.0 percent, monetary policymakers believe.

Higher salaries are "the linchpin of a self-sustained increase in inflation," ECB President Mario Draghi told journalists at a press conference in early March.

Economic growth in Germany has become increasingly dependent on consumption at home, even as the country's traditionally strong export sector remains in robust health.

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