Good news for all employees in Germany: Since nominal wages rose significantly more than consumer prices in the first quarter of 2024, real wages increased by 3.8 percent. This is the highest increase since 2008.

Strong wage increases and inflation compensation premiums have significantly increased the gross income of employees in Germany in the first quarter of this year. Compared to the same period last year, nominal wages rose by 6.4 percent, the Federal Statistical Office reported on Wednesday. Since consumer prices only rose by 2.5 percent at the same time, real wages rose by 3.8 percent. This was the highest increase since the statistics were introduced in 2008.

Nominal wages only rose more sharply once in the second quarter of 2023 than in the period currently under review. The reasons for this were not only the collectively agreed wage increases but also the agreed inflation compensation premiums, which were exempt from taxes and contributions by the state up to a maximum of 3,000 euros. Above-average increases were seen primarily in sectors with a high proportion of public sector employees. In addition, employees with comparatively low incomes benefited most from the development.

Real wages put gross salaries in relation to the development of consumer prices. Since the final quarter of 2021, inflation in Germany had increased significantly and weakened the purchasing power of employees. Real wages fell significantly. Since mid-2023, real wages have been rising again as inflation has fallen.