Wages are rising on paper, but due to inflation, many still don’t have extra money in their wallets.
“We are currently experiencing the largest real wage loss in 80 years.” This is written by UBS and is based on their latest salary survey of 290 companies. The reason is the wage increase that was negotiated a year ago. Wages rose an average of 1.1 percent at the start of 2022. But then came inflation.
UBS economist Florian Germanier explains: “As a result, this year’s inflation has swept away this year’s wage growth, and there has even been a loss of income.”
Purchasing power is falling this year
Employees have lost 1.8 percent of their purchasing power this year, according to the latest UBS survey. This means that although wages on the payroll have increased in early 2022, people can buy less with their money than they did a year ago.
Now the social partners were negotiating again, with inflation as the dominant issue. The result: Wages are rising again across all industries by an average of 2.2 percent. This is stronger than almost 15 years ago.
In fact, a zero round is expected
But since inflation is still high, this wage increase is likely to be almost completely absorbed by inflation, according to Florian Germanier, who co-authored the UBS study: “It’s certainly a bit surprising that wages next year will be below current levels. will be the level of inflation.”
He attributes this relatively weak outcome of the negotiations to two reasons: “On the one hand, we see in our survey that the economic outlook for companies has darkened.” Companies are struggling with high inflation, increased energy costs and falling demand from abroad.
On the other hand, many companies assumed that the rate of inflation could drop soon. According to the UBS expert, both speak against large wage increases.
Long-term higher wages for qualified workers
In the long run, it will look better for employees, he believes: “The understaffing is getting worse: not only is it getting bigger, it’s also becoming more visible.” Employees could therefore have more and more influence in wage negotiations in the future.
It is quite possible that they will soon be able to negotiate a wage increase that not only looks good nominally, but also actually brings more money to the employees.