3/4 Employees Covered by Collective Agreements Received Inflation Reimbursement

More than three quarters (77.9%) of employees covered by collective agreements received an inflaiton reimbursement since October 2022, when the German government set up the tax-free possibility of such a reimbursement of up to a one-time E3,000 payment.

• The average payment accounted to E2,761 per employee (around 92% of the maximum payment).
• The facilicy was one of the drivers behind German negotiated wage growth including one-off payments of 3.7% in 2023, Destatis notes.
• Between industries, both the size of the payment as well as the proportion of employees covered by collective agreements fluctuated strongly. The lowest average payments were paid in the construction and agriculture industries, at E1,104 and E1,689, respectively. 8/19 industries received less than the average payment.
• There were 9/19 industries in which at least 80% of employees received a higher payment than the average for the scheme.
• The facilicy will still be open until the end of 2024. Industries with collective agreements due to be renegotiated between now and the end of the year will still see candidates eligible for potential payments, but only for those who have not already received a payment.
• Negotiated wages accounted for about 41% of employees in Germany in 2022.
• Negotiated wage growth is a key metric the ECB is considering regarding potential rate cuts later this year, as indicated again by President Lagarde in her last press conference.