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WORKING IN GERMANY

How much do employees in Germany typically earn?

Ever wondered how much people in Germany earn on average? We look at the salaries of employees as well as the top-paying sectors and which regions offer the best pay.

Published: 5 April 2024 12:35 CEST
Updated: 18 April 2024 13:16 CEST
A wallet with euros.
A wallet with euros. Image by Tom from Pixabay

As one of the largest economies in the world, job prospects in Germany are positive and people can earn a respectable wage.

However, there are significant differences in how much people in Germany are paid. The state where an employee lives, the profession or job as well as gender continue to have a major influence on the distribution of income. 

Recent studies help explain how much employees typically earn. 

How much do workers earn on average?

A German full-time employee earned an average gross salary of €4,323 per month in April 2023, according to recent data released by the Federal Statistical Office. That means the gross annual salary on average in Germany was around €51,876 last year. 

It’s worth noting that taxes and social security contributions Germany are fairly high so the take-home pay of employees is significantly lower than gross income.

READ ALSO: What German tax class are you in?

Meanwhile, the data from the statistical office is based on the average gross salary, also referred to as the arithmetic mean. But some experts say that the significance of these statistics could be improved by using the median, also known as the central value. The median is the value that is exactly in the middle of all individual data when sorting the data in ascending order.

Which jobs offer the best pay?

Not surprisingly, there are big differences in how much you take home depending on the kind of job you work in. 

At the top of the ranking, full-time employees in the financial and insurance services sector earned an average gross salary of €5,841 per month last year. IT and communication workers received €5,769 per month, while those working in freelance, scientific and technical services earned on average €5,436.

The average gross monthly salary in the public sector was €4,324.

At the lower end of the scale, average salaries in the agricultural and forestry sector (including fishing) stood at €2,798 per month last year, while employees in the catering sector earned €2,860 gross income per month.

Where you live makes a difference

The place of residence or work in Germany also plays an important role in the amount of pay you get. 

Even after more than 30 years of reunification, the difference in earnings between west and east Germany is still clearly visible.

According to recruitment portal StepStone’s 2023 report, median salaries in Hamburg and Baden-Württemberg are around 10 percent above the average. Overall the research found that the east-west gap (not including Berlin) was 15 percent. An average median salary was €38,700 in eastern Germany and €45,500 in western Germany. 

Hamburg has the highest average median salary at €48,100. Baden-Württemberg is second with €48,000, followed by Hesse at €47,800. Thuringia (€36,600), Mecklenburg-Western Pomerania (€36,200), and Saxony-Anhalt (€36,100) are at the other end of the scale. 

READ ALSO: How your wages in Germany could depend heavily on where you live

The famous Karl Marx statue in Chemnitz, Saxony.

The famous Karl Marx statue in Chemnitz, Saxony. Differences between East and West can still be felt in Germany today. Photo: picture alliance/dpa/dpa-Zentralbild | Hendrik Schmidt

Large gender pay gap

Gender can also have a big influence on salary levels in Germany, with women on average receiving less pay than their male colleagues for the same work.

According to the Federal Statistical Office, the average gross hourly wage in April 2023 for full-time men was €27.02 per hour, while full-time women earned €23.59. This corresponds to a salary difference of 12.7 percent.

The StepStone salary report also comes to the conclusion that women earn 12.4 percent less than men. According to the online job portal’s calculations, a woman earns an average of €5,750 less per year.

This difference in earnings is referred to as the “gender pay gap”. This percentage has hardly changed since 2002. The German government has set itself the goal of reducing the gender pay gap to 10 percent by 2030.

READ ALSO: Why is the gender pay gap so big in German-speaking countries?

How does net disposable income in Germany compare to other countries?

The GfK Purchasing Power Study, which determines the net disposable income of Europeans (that’s after tax and deductions), shows how German employees compare with other European countries. 

GfK put the average net income in Europe at €17,688 per capita for 2023 as a whole.

Liechtenstein leads Europe with an average disposable net income of €68,843 per capita. Switzerland is in second place with a net disposable income of €49,592 per capita, while Luxembourg follows with an average net income of €40,931.

Germany was further down the ranking with a net disposable income of €26,271 per capita. 

Of the 42 countries analysed, only 16 were above the European average net income. For instance in Spain, disposal net incomes averaged €16,449.

READ ALSO: Where in Germany do people have the most (and least) income?

Member comments

  1. Really great that you link where the data comes from 👍

    But, it should be noted that the 4323/month is base salary. „Brutto­monats­verdienst ohne Sonder­zahlungen“

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WORKING IN GERMANY

Reader Question: Can I have a freelance side gig as an employee in Germany?

Going freelance in Germany - or even starting a side hustle - can be a rewarding and exciting challenge. But it can come with its own bureaucratic challenges. What are the rules around having a freelance gig if you already have a job?

Published: 30 April 2024 10:06 CEST
Updated: 30 April 2024 15:52 CEST
Reader Question: Can I have a freelance side gig as an employee in Germany?

Whether it’s to try out freelancing or simply to earn a bit of extra money, many people in Germany may have thought about trying out a side gig – or a nebenberufliche Tätigkeit – while they still have a job. It might be an especially attractive option for part-time workers looking to try out a new project as well.

Germany generally allows this, provided that your employment contract doesn’t prohibit it explicitly.

That’s why the first thing you should do if you’re thinking about starting a side hustle is to read your employment contract.

At first, you’re looking to see if side gigs are explicitly prohibited. If there’s no explicit mention of it being prohibited, the next thing to look for is whether you need to seek the company’s permission – possibly through their HR department – to take up your side gig. If you do, this will be explicitly spelled out in your contract.

Once you do that, you need to check and see whether your side gig falls under the Trade Act (Gewerbeordnung). If it does, you will have to apply for the corresponding business license. If it doesn’t, you can be classed as a Freiberufler – or freelancer – and won’t need a special licence to start your business.

You’ll need to do some homework on what kind of business you are – and you’ll need to register with the tax office. Photo: picture alliance/dpa/dpa-tmn | Benjamin Nolte

However in both cases, you will still have to register with your local tax office (Finanzamt). 

In Germany, some professions will require you to have a Befähigungsnachweis – “certificate of competence” – proving you have expertise in your area and are appropriately accredited. These include regulated trades like working as a financial advisor or real estate agent.

Other trades, like marketing services and hospitality, won’t need such a certificate, but you might still be classed as a Gewerbe – which brings some different rules with it. Those who belong to the so-called “new self-employed”, such as artists, writers and journalists, are Freiberufler and don’t need a trade licence.

READ ALSO: Everything you need to know about becoming a freelancer in Germany

Do I need extra insurance?

For your job as an employee, you already will have the necessary health, care and pension insurance – with your contributions from your income there getting taken off your payslip.

If you have a side gig, you remain insured through your main job and don’t need to take out additional insurance. Your contributions – based on the income from your main job – will remain the same.

This changes if your side hustle becomes your main hustle – measured by your working hours. As long as the number of working hours you spend on your side hustle amount to less than your main job, you don’t need extra insurance.

In most cases, having a side hustle in Germany won’t impact your health insurance eligibility or contributions. Photo: thirdman /Pexels

The exception to this is if you take on an employee who works more hours than a mini-jobber. Hiring a mini-jobber is still fine.

If your side hustle does become your main hustle and you’re publicly insured, you need to advise your Krankenkasse.

KSK: How creative freelancers can pay less for German health insurance

What income tax do I have to pay?

First up, Germany has a tax class basically designed for second jobs. It’s called Tax Class 6 and it exists alongside your other tax class. That means that the income from your main job will be taxed according to the rules of one of five different tax classes. Which one you belong to in this case depends on family variables like your marital status or whether you’re a single parent.

Tax class 6, however, doesn’t take any of these variables into account and exists only for your side income. As such, your main employment income will never be taxed according to tax class 6 and your side income won’t receive the breaks and credits that your main income will if you normally belong to a tax class that gives you any advantages.

Tax class 6 will apply to any income you earn on your side hustle above €538 a month. Anything you earn up to this amount though is exempt from additional tax.

It’s important to note that if you do earn more than the monthly €538 minimum on your side hustle and thus have income subject to Tax class 6, you’ll need to file a tax return.

EXPLAINED: What German tax class are you in?

Do I have to charge VAT?

If your side hustle is earning you €22,000 a year or less, you can class yourself as a “small firm” or Kleinunternehmer – and you don’t need to charge VAT on your invoices. This is also the case if you earn above this amount but your income is earned abroad or from foreign clients. 

If you earn above that amount and work with German clients, then you will need to charge VAT and submit VAT returns to the Finanzamt. There can be advantages in doing this though, as it’s through these returns that you can get VAT back that you spend on legitimate business expenses.

EXPLAINED: What are the best bank accounts in Germany for freelancers?

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