The purchasing power of workers in Germany has fallen significantly as modest wage increases have not kept pace with record high inflation, the country's central bank said in a report, Reuters reported.
The Bundesbank also said in its monthly report that the upcoming wage talks will need to balance the uncertain economic outlook and concerns about job losses with persistently high inflation and labor shortages.
Base wages rose just 1.6% in the first quarter of the year after excluding pandemic-related bonuses, and even new contracts showed only modest increases. Inflation in April was 7.4%, while the Bundesbank forecasts it at around 7% for the year.
At present, the increase in collective wages is still affected by old agreements that were negotiated in the face of lower inflation and pandemic-related damage, the Bundesbank said in a statement.
The central bank added that German output should pick up slightly in the second quarter of the year thanks to the easing of pandemic-related restrictions, which should boost consumption.