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German unemployment hits record low despite Brexit gloom

Unemployment in Germany hit a new record low in March, official data showed Friday, as Europe's largest economy continues to defy economic uncertainty with a strong performance.

Published: 31 March 2017 11:28 CEST

German unemployment hits record low despite Brexit gloom

Photo: DPA

The out-of-work figure fell to 5.8 percent this month, the Federal Labour Agency said, beating analysts' forecasts.

A 0.1-percentage point fall from the level it had held since January placed it at a new all-time low since German reunification in 1990.

“The number of unemployed sank significantly as spring begins to breathe life into the economy,” said the agency's chief Detlef Scheel in a statement.

“Growth in employment is holding steady and demand from companies for new employees remains high.”

In seasonally-adjusted figures, the number of people registered as out of work fell by 30,000 in March.

Jobs, wages and working conditions are set to be a key battleground in German elections slated for September, with left-wing politicians pushing for higher wages and more unemployment protection.

Right-wingers contend that tough employment law reforms in the mid-2000s built the foundation for Germany's present economic success and should not be rolled back.

Five things to know about salaries in Germany

If you are moving to Germany, you might soon start looking for a job in the country. However, like many other aspects of living abroad, there are several cultural differences and specificities when it comes to job hunting in Germany – especially when it comes to salaries.

Here are five things to know about salaries in Germany.

There is a minimum wage in Germany

Germany’s minimum wage of €12.41 per hour, pre-tax came into effect at the start of this year. This amounts to a monthly salary of €2,054 which ranks ninth in the world. The minimum wage will rise again in 2025 to €12.82 per hour before tax deductions.

There have been calls recently to hike the salary up higher to €14 per hour.

READ ALSO: Millions of workers in Germany ‘earning less than €14 per hour’

Find out salary expectations

Germany does not require companies to list salary ranges for listed positions. But that may be changing soon. The EU parliament passed a wage transparency law to require companies to publish annual reports detailing wage and wage discrepancy information. The rules, which are set to go into effect in 2027, are intended to help close the gender pay gap.

In the meantime, employees can utilise online resources to find industry averages and expectations for different roles:

Gehalt.de offers users access to salary information on more than 800 professions
Online platform, Kununu provides compensation information and employer reviews to users in the DACH region
Berlin residents can utilise REDSOFA’s salary survey for an overview of salary averages in the country’s capital city

As of April 2023 the average gross monthly salary was €4,323 according to Germany’s Federal Statistical Office.

Two-thirds of full time workers make less than this average monthly salary and one-third of workers earn more than this average monthly salary.

While wages after deductions may be less than similar roles in other countries, it is also important to take into consideration what other benefits come with a salary. Paid holiday leave, pension contributions, long notice periods and annual bonuses can help make up some of that difference.

READ ALSO: How much do employees in Germany typically earn?

Check your payment schedule

Internationals can usually expect their salary once a month when working in Germany. Many German companies choose to pay employees either on the 1st or 15th of the month. It is also important to note that most employees can expect to receive their first pay check within 30 or 45 days of starting.

For positions that offer yearly bonuses, these payments are included in a 13th pay check which are subject to income tax.

A person works on a laptop.

A person works on a laptop. Image by Bartek Zakrzewski from Pixabay

How many hours do you work?

When looking for a job, don’t forget to check how many hours you can expect. Job descriptions will include expectations for time commitments.

Mini-jobs, as expected from the name, are limited in hours and pay. Employees can expect up to €538 per month. Mini-jobs do not provide social security because they do not require social security contributions. Employees are also not automatically covered by health and nursing care insurance.

Teilzeit, or part time jobs, are defined as any job where working hours are less than a full time position.

A common misconception is that part-time work requires working 20 hours or less a week. But an employee working five days a week for 30 hours, at a position that is typically 40 hours when full time can also be defined as a part time worker.

READ ALSO: The rules in Germany around ‘mini’ and ‘midi jobs’

In fact, Germany has a term for workers who work between 28 and 36 hours a week. Vollzeitnahe Teilzeit, or nearly full time part time workers, can be a popular choice for some people, including parents. These positions can give employees more flexibility to balance work and family responsibilities. It is important to note that these workers are paid according to their time worked, so it will still amount to less than full time.

Depending on the work schedule, part time employees can earn the same amount of vacation as their full-time counterparts. That’s because holiday leave is calculated based on days worked, not hours. If a part time worker comes in five days a week, they will be eligible for at least 20 days of holiday. If that same part time worker comes in three days a week, they will be legally entitled to twelve days of vacation, even if they worked the same hours as the other employee.

In most companies, weekly working hours between 35 and 40 hours are considered full-time employment or Vollzeitbeschäftigung.

Watch out for the gross v. net difference

Before you sign the dotted line, it will be important to check how much of your gross salary you’ll be able to keep come pay day. Companies that include salary expectations in descriptions include gross salary (Bruttoeinkommen) – not the net income after taxes and deductions (Nettoeinkommen). The amount deducted will depend on how much you earn, the tax class you’re in and on other factors such as how much you’re paying for healthcare but it is usually around 40 percent.

Salaried employees can find information on the deductions on their pay slip. Some to expect to see include:

Taxes are deducted directly from the gross pay. The amount is based on the tax bracket your salary falls within
A percentage of your gross salary is also deducted for your pension / retirement contributions
Church taxes between eight and nine percent of your salary will also be due if you are affiliated with a religion
Unemployment insurance amounts to a 2.5 percent deduction from your gross salary. It is important to note that the insurance covers a salary up to €90,600
Health insurance contribution rates are typically split between employers and employees. The rate depends on the provider. In 2024, the TK contribution rate to health insurance is 15.8 percent of the gross income

READ ALSO: What you need to know about your payslip in Germany

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