21m German retirees in line for hefty pension increase this year thanks to higher wages and inflation
German retirees will get a hefty pension increase this year, largely as a result of higher wages in Europe’s biggest economy as inflation climbs sharply, the government said.
The German labour ministry said pensions will increase by 5.35% in the former West Germany on July 1 and by 6.12% in the formerly communist east.
There was no increase in the west last year and an increase of 0.72% in the east as the economy was hit by the coronavirus pandemic.
Labour minister Hubertus Heil said that “because we managed in Germany to keep the labour market stable in the (coronavirus) crisis”, the financing of the pension system is in good shape and the increase is possible.
He said that “21 million retirees in Germany who … kept Germany running during their working lives will benefit from this”.
Rises in German pensions are linked largely to wage developments.
Inflation has added to upward pressure on wages – it stood at 5.1% in Germany in February, before the economic impact of Russia’s invasion of Ukraine started to be felt in earnest.
The latest increase will bring pensions in the less prosperous east to 98.6% of those in the west, which is home to most of Germany’s population.
The gap is supposed to be eliminated altogether by mid-2024.
Separately, Chancellor Olaf Scholz’s cabinet agreed last month to raise Germany’s minimum wage to 12 euro (£10.06) per hour in October, making good on a key pledge in the centre-left leader’s election campaign last year.
It currently stands at 9.82 euro (£8.23).