Slipping Salaries
September 24, 2007
Quoting from statistics compiled by the German labor ministry, Bild newspaper reported Monday, Sept. 24, that the net wages of German workers fell last year to their lowest level in 20 years.
The average net pay check -- after the deduction of taxes, social contributions and taking into account price developments in the past year -- amounted to 15,845 euros ($22,357), the paper said. That was almost the same as in 1986, when the average net salary was 15,785 euros.
The report said that German workers paid record levels of income tax and social contributions on their gross wages last year -- an average of 9,291 euros. That marked an increase of 66 percent from 1986. However, over the same period, gross wages rose by just 48 percent, the paper wrote, from 22,333 euros in 1986 to 33,105 in 2006.
Inflation to blame
Inflation is largely to blame for the fact that workers are taking home less pay despite rising gross wages, statistics showed.
While salaries increased by 4.1 percent over the past five years, prices for the same period shot up by 7.1 percent.
"The rise in gross salaries is comparatively low because companies have shaved off extra perks such as vacation- and Christmas pay," Rudolf Hickel, director of the IAW told Bild. "In addition, prices are rising as are social contributions and taxes."
The report comes at a time when the German economy, the biggest in the euro zone, is experiencing a robust recovery after years in the doldrums and companies have begun a hiring offensive.
Calls for minimum wage
Michael Sommer, head of the DGB German Trade Union Federation, criticized the steady decline in net wages as illustrated by the statistics.
"We need urgent action for the 'common man on the street' -- over the past years, their wallets have been emptied," Sommer told the newspaper.
The trade union leader renewed calls for introducing a national minimum wage of at least 7,50 euros an hour.
Last week, German Chancellor Angela Merkel's cabinet agreed on legislation that paves the way for basic rates of pay for postal workers, a move that extends the industries covered by statutory pay levels without introducing a national minimum wage. Minimum wages currently apply only to the building industry and to some cleaners.