In recent years, salaries in Germany have stagnated. However, according to some experts, a significant wage hike could be on the horizon, driven by the country’s growing worker shortage. 

IfW predicts wages increases of 5 percent per year in Germany

According to economists at the Kiel Institute for the World Economy (IfW), wages in Germany are likely to rise significantly in the coming years. In an interview with German daily Bild, IfW boss Gabriel Felbermayr said employees could expect “excessively high” wage increases: “On average, wage increases of 5 percent a year are realistic.” 

He said the situation on the skilled labour market is driving these hikes - and that skilled workers in particular would benefit from higher wages. The industry and craft sectors were already suffering from a lack of qualified workers, and this has only been exacerbated by the coronavirus pandemic. 

The squeeze is now also being felt by other sectors of the economy as well. The hospitality industry is still short of thousands of workers; according to figures from the Federal Employment Agency, the number of vacancies has practically doubled since April. 

Ageing population heats up demand for workers

Felbermayr also said that demographic trends in Germany will also contribute to the positive development of wages. The rapid ageing of the population means that, proportionally, the number of people working in Germany will decline in the future. “Companies will therefore compete for employees more intensively than they have for decades.” 

A third and final factor that will push up wages in Germany is increases to the minimum wage and consumer prices, which are already on the horizon in the lead-up to the federal election. The SPD and Green parties are calling for the minimum wage to be increased from 9,60 to 12 euros per hour in the future. Prices in general are also on the rise, with the Federal Statistical Office reporting that consumer prices rose by 3,9 percent in August 2021 alone.