Deutsche Bank’s Marc Schattenberg analyzes Germany’s 2026 wage round, covering around 10 million employees across public services, retail, wholesale, chemicals and metalworking. The bank forecasts collective wage growth close to 3.0% in 2026 and 2027, up from an estimated 2.7% in 2025, with higher gains in the public sector and continued support for private consumption as inflation eases.
Collective bargaining set to stay firm
“For the years 2026 and 2027, we forecast collective wage growth of almost 3.0% annually, up from estimated 2.7% in 2025. While somewhat stronger outcomes are expected particularly in the public sector, unions in structurally challenged industries will likely prioritize job security rather than pay rises. In personnel-intensive retail and wholesale trade, pressure on the lower wage brackets could arise due to the increase of 8.4% in the statutory minimum wage effective since January.”
“Unions typically enter negotiations with strong demands for pay increases, but these are not fully met in the end. On the 10-year average, unions’ enforcement rate was roughly 45%. For ver.di’s demand of 7% in the public sector, this would imply a settlement rate of around 3.2%.”
“The pattern of collective wage development, both with and without one-off payments, is set to normalize. This follows a period in 2024 and 2025 where it was significantly distorted by substantial base effects stemming from generous inflation bonuses. Strong base effects likely dampened overall collective wage growth to an estimated 2.7% in 2025.”
“Against this backdrop, our forecast for overall collective wage growth of 2.9% in 2026 represents a moderation. The wage model is based on the lagged rates of change of core inflation, unemployment, productivity growth, and the consideration of particularly large collective bargaining groups.”
“Collective wage developments and the minimum wage increase (where industry-specific agreements also exist) together determine the development of so-called effective earnings or gross wages and salaries per employee. Due to the significant increase in the statutory minimum wage in 2026 and the already set increase of another 5.0% for 2027, aggregate gross wages will rise by 3.7% and 3.4% in 2026 and 2027 respectively. This, together with weaker inflation, is likely to support private consumption.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/germany-robust-collective-growth-to-support-consumption-deutsche-bank-202602111259
