Since the latest economic and financial crisis, Germany has had an expansive wage policy. Whereas between 2000 and 2008 labour costs and productivity were still moving in line, since 2009 labour costs have increased at a higher rate. At present, indeed, German wage policy is not only more expansive than it was before the crisis, but also more expansive than its counterparts in other Eurozone countries. Between 2008 and 2013 real unit labour costs per employee increased by 4 per cent in Germany as a whole, while there were falls of between 4 and 10 per cent in Ireland, Greece, Portugal and Spain. German wage policy has thus contributed significantly to reducing wage and price divergence in the Eurozone. However, given the limited scope currently available to German exporters’ in their price-setting, the continuation of an expansive wage policy oriented not only on productivity growth but also on the European Central Bank’s inflation target is not to be recommended.
In 2021, German unit labour costs were an average of 13 per cent higher than in the 27 countries in our comparison and 8 per cent higher than in other countries in the Eurozone.
Since the signing of the Stinnes-Legien Agreement in 1918, the collective bargaining autonomy of Germany’s employers’ associations and trade unions has been the subject of continual political debate and at times its legitimacy even called into question.