German real wages surge by record 3.8% in Q1 ’24

Germany saw a record 3.8 per cent year-on-year increase in real earnings during the first quarter of 2024, Reuters reported citing data released by the statistics office on Wednesday.

This surge, marking the fourth consecutive quarterly rise, represents the strongest jump since 2008 when record-keeping began.

Nominal wages also saw a significant increase of 6.4 per cent during the same period, the second-highest on record. With inflation at 2.5 per cent, workers experienced less erosion in their purchasing power.

The data indicates a reversal in the trend for German workers, who had witnessed a decline in real wages from late 2021 to the first quarter of 2023.

Economists like Sebastian Dullien from the IMK Institute anticipate this recovery in purchasing power to drive increased consumer spending in the coming months, potentially becoming a crucial driver for economic growth.

Despite this optimistic outlook, consumer sentiment remains cautious, with consumers are still hesitant about larger purchases due to ongoing uncertainty.

However, heading into June, consumer sentiment has been on the rise for four consecutive months, buoyed by expectations of higher wages and an improving economic landscape.