A note on real wage development in Germany

The Federal Ministry of Labour recently presented the figures on real wage development in Germany, which led to an extensive reaction in the media. According to the report, real, price-adjusted net wages of employees in Germany are at the lowest level since 1986. Indeed, wages have come under pressure in recent years, and the adjusted wage rate, i.e., the share of employee remuneration in national income, allowing for the shift in the structure of employment since 1980, has decreased. Already in the 1980s it was clearly regressive, and the last phase with a perceptible continuous rise (1970 to 1974) is already more than three decades in the past. The interpretations by many in the media of the numbers published by the Ministry are misleading, however. Concealed behind the small rise of real net incomes in the past 20 years is above all a structural effect. In recent years many part-time jobs and marginal employment contracts such as mini-jobs and one euro jobs have been create, which would not have been the case had wages been higher. This has lowered the average but does not indicate that a problematic development has occurred. The monthly net real wage of a western German skilled worker has increased relatively much more strongly. For single households the statistics show a plus of 25%, and for married couples, including their child allowances, an increase of 53%. This means that for standard employment there has been a clear increase in real hourly incomes in recent decades: since 1970, depending on marital status, a plus of between half to three quarters of the earnings at the time.