Wages in Germany have grown much faster than in other eurozone countries in recent years, a Bundesbank (central bank) study published Monday found, reversing conditions seen before the financial crisis that stoked intra-European resentment. Pay packets in Europe's largest economy swelled by 2.7 percent per year on average between 2014 and 2017, far outpacing the 1.0 percent seen in the remaining 18 single currency nations.
In the pre-crisis years from 2004 to 2007, German wages grew 0.6 percent annually compared with 3.5 percent elsewhere in the eurozone. "The period of wage moderation in Germany is over," the Bundesbank determined. Germany's habit of keeping wages low, squeezing the prices of its products and making them more competitive abroad, was a long-running bone of contention with its neighbours.
They argued the practice also throttled domestic consumption in the central European powerhouse, limiting other countries' ability to benefit from its strength by selling more to Germans.
Even as wage growth has picked up, other factors may have held it back from a surge powered by Germany's record low levels of unemployment and shortages of qualified labour, the Bundesbank found.
Large numbers of workers from other EU countries have come to Germany, often accepting lower salaries than domestic workers might and slowing the increase in average pay. Meanwhile, unions have in recent years often battled for more quality-of-life changes, like flexible working time, as much as for more cash.
Looking ahead, German wage growth is likely to pick up further as inflation gathers pace, the Bundesbank said.
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