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Energy prices, inflation, minimum wage increases – according to the Institute for Macroeconomics and Economic Research, these are the driving factors behind the sharp rise in labor costs last year.
According to a study, labor costs in Germany rose more sharply last year than they have in years. The reasons are the sharp rise in energy prices and the very high inflation, as announced on Thursday by the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation. In an EU comparison, Germany ranks sixth behind Luxembourg, Denmark, Belgium, Sweden and France.
According to IMK 2022, labor costs per hour worked in the private sector in Germany were 40 euros. This was a nominal increase of 6.4 percent compared to the previous year. Labor costs increased by an average of 5.4 percent in the EU and by 5.0 percent in the euro area. According to the IMK, one reason for the comparatively strong increase in Germany was the minimum wage increase in October 2022.
Because of the high inflation, however, employees suffered real wage losses, as the IMK emphasized. Many large companies, on the other hand, closed with high profits.
Unit labor costs also increased in Germany in 2022 at 3.8 percent, slightly more than in the euro area at 3.3 percent. “Nevertheless, that’s not a cause for concern,” the authors of the study explained. “Germany’s competitive position remains unchanged.” German unit labor costs have risen by an average of 2.4 percent annually over the past three years, and thus somewhat more slowly than the 2.5 percent in the euro area as a whole.
In addition to gross wages, labor costs include the employer’s share of social security contributions, expenses for training and further education, and taxes applicable to labor costs. Unit labor costs relate labor costs to productivity gains.
(afp/red)