Necessity has turned into a debate about envy: Some of Germany’s employees receive the tax- and duty-free inflation premium from their employer at the end of the year. The other part doesn’t. Which companies pay and what arguments speak against it.
The so-called “inflation compensation premium” is a typical German monstrous word – but it feels like nothing more than a big boot that you put in front of the door on Santa Claus. Just as children get more when the chocolate Santa Clauses are on sale, the wish of hundreds of thousands of employees for a bigger chunk of their wages is currently being fulfilled. Many benefit from one-off payments that their employers grant them, because the government has made this inflation premium more attractive: since October 26, companies have been able to grant their employees a one-off payment of up to 3,000 euros tax-free. The bonus is part of the third relief package and is valid from October 26 to December 31, 2024 and can also be paid out in several installments.
One-time payments are nothing new and have been recommended by compensation experts, especially since early summer. In view of the inflation, employers came under increasing pressure to relieve their employees on a selective basis. Government regulations played into their hands.
The Institute of the German Economy (IW) calculated an appreciable relief: Those who earn 25,000 euros per year and get the 3000 euros have to pay 1220 euros less in taxes and duties. With an income of 50,000 euros it is 1420 euros and with an income of 75,000 euros it is 1440 euros. No wonder that employer president Rainer Dulger supports the tax-exempt one-off payment. “Employees quickly get additional money, and employers will not incur any higher costs in the long term.” However, Dulger fears that not all companies will make use of it.
Because the inflation premium is a voluntary payment by employers. Everyone can, nobody has to. And so since then there has been a rift through Germany between those who pay them and those where the employees get nothing. One fear is that large corporations are more likely to have the means to give their people an inflation premium than medium-sized companies: “In view of the current economic situation, many small and medium-sized companies will hardly be able to afford to pay a premium of this size to their employees”. , warned Markus Jerger, chairman of the BVMW association of medium-sized companies.
Because smaller companies in the corresponding sectors would suffer even more from the high energy prices and would have no money left: “We therefore assume that this one-off payment will only benefit employees who are employed under collective agreements in large companies,” said Jerger.
The one-off payments played a major role in the most recent collective bargaining disputes. When the IG BCE trade union and the BAVC employers’ association recently agreed on a new collective bargaining package for the 580,000 employees in the chemical and pharmaceutical industries, there was a salary increase and a bonus for the full 3,000 euros – divided into two tranches of 1,500 euros each no later than January 2023 and January 2024. The degree in the metal and electrical industry also included the tax-free one-off payment of 3000 euros.
One of the first companies to come forward about the inflation premium was EBM Papst in September. At the electric motor and fan manufacturer, the 6,000 German employees receive a one-off payment of 500 euros, trainees 150 euros. Porsche is traditionally generous: The carmaker pays up to 3,000 euros depending on length of service. Alexander Sixt, co-head of the Sixt car rental company, stated: “We pay every employee worldwide a special bonus of 1,700 euros as inflation compensation until the end of the year.” At Airbus, all 40,000 employees in Germany could benefit from an inflation premium of 1,500 benefit from euros. At the Bertelsmann media group, employees with a gross salary of up to 75,000 euros will receive two tranches of 1,500 euros each.
Smaller Santa Clauses are baked in retail:
The companies keep an eye on the shortage of skilled workers and know exactly that employees take a close look at how an employer behaves, especially in difficult times. Accordingly, the banks in this country, which sense a significant shortage of skilled workers, are not holding back either.
Although there has just been a collectively agreed wage increase, the cigarette manufacturers are not stingy with the inflation premium: Reemtsma pays its employees an additional 190 euros net per month for a year, i.e. a total of 2280 euros. The competitors Japan Tobacco International and Philip Morris, on the other hand, have one-time payments of 2,400 euros. It is similar at British American Tobacco (BAT), where full-time employees and trainees get between 1880 and 2600 euros.
There is no right to the inflation compensation premium. Workers can negotiate them, but cannot enforce them. Apart from these extraordinary inflation bonuses, Germans can look forward to higher salaries, according to a recent analysis by WTW, a consultancy specializing in remuneration issues: This year they will jump by 3.8 percent and in 2023 by 4.5 percent.
Even if financial matters are traditionally the top priority when people are asked what is important to them in a job, the topic of job security is particularly important in times of crisis. In view of the approaching recession, anyone who can credibly convey that the business model is intact has a good hand here in the fight for good people. In addition, so-called fringe benefits are becoming more and more important – above all, flexibility in the workplace and place of work. Santa Claus would probably like this luxury: On December 6, he will find many empty boots in front of doors all over the world.
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