German real wages post record 1.7% increase in 2014

[BERLIN] German real wages posted their largest increase in 2014 since the data was first collected in 2008, Germany's statistics office said on Thursday, in the latest positive sign for private consumption in Europe's largest economy.

Real wages rose by 1.7 per cent on the year, the office said, revising up its preliminary estimate by 0.1 per centage points. They had fallen by 0.l per cent in 2013.

A full-time worker in Germany earned an average of 46,575 euros before tax in 2014, including special payments, the data showed.

Bankers and insurance workers, employees in the communication and information sector and people working for energy suppliers got the biggest paychecks.

Nominal wages jumped by 2.6 per cent compared with the previous year - far more sharply than consumer prices, which were up by 0.9 per cent during the same period.

That bodes well for household spending, which is expected to be a key pillar of support for the economy this year. Shoppers are also benefitting from record low unemployment and low inflation while cheap oil is freeing up some of their cash.

Other data also suggests private consumption will pick up this year. A survey published on Thursday showed morale among consumers is at its highest level in 13-1/2 years. In January retail sales surged at their fastest pace in seven years.

Higher pay in Germany will likely be welcomed by struggling euro zone states as it could reduce Germany's competitive advantage over other countries in the bloc.

REUTERS