Overview

• Real wages rose by 1.2% in the first quarter of 2025, marking eight consecutive quarterly gains but the smallest increase since Q3 2023.
• Nominal pay climbed 3.6% while consumer prices increased by 2.3%, yielding a moderate real wage boost, according to the Statistisches Bundesamt.
• Workers in the lowest income quintile saw their wages jump by 7.2%, the highest gain among all earnings groups and a sign of narrowing wage inequality.
• The €3,000 tax-free inflation compensation premium expired at the end of 2024, removing a key driver of last year’s robust real wage growth.
• Rising social security and health insurance contributions are expected to further limit net purchasing power gains for employees this year.