BERLIN, November 30, Reuters - Negotiated wages in Germany barely grew in the third quarter despite rising inflation, leaving consumers with less money in their wallets, which could hurt future household spending in Europe's largest economy, according to data released on Tuesday.
The Federal Statistics Office said that the average wage of unionized employees rose by 0.9% year-on-year from July to September. This was the smallest increase since the office began compiling the data in 2010.
The development of wages in the euro zone is closely watched by central bankers and policy makers. They are looking for any clues as to whether rising consumer prices lead to higher wages, which could lead to a wage price spiral and lead to higher inflation in the medium term.
Tuesday's figure includes the agreed basic remuneration and extra payments for in-wage settlements, such as one-off payments, annual extra payments or agreed back payments.
Negotiated wages rose by 1.3% on the year, excluding special effects related to extra payments in the car industry.
The office said that workers suffered an actual decline in real wages in the third quarter as consumer prices rose by 3.9% in the three months.
The wage data came after unions secured a 2.8% wage increase for more than a million public sector workers at the federal state level, a deal analysts said was too modest to kick off a wage-price spiral in Germany.
The decline in real wages is bad for future household spending, which was the sole driver of German gross domestic product growth in the third quarter due to supply bottlenecks and production problems in the industrial sector.
The Greens and Free Democrats FDP will raise the minimum wage by 25% to 12 euros an hour next year, according to the Chancellor-in-waiting Olaf Scholz, from the centre-left Social Democrats SPD.