According to the OECD, corporate profits have risen sharply in Germany.
(Photo: dpa)
Berlin According to a study by the OECD, corporate profits in Germany have risen more sharply in recent years than in many other industrialized countries. Since the end of 2019 – the last quarter before the outbreak of the corona pandemic – the so-called unit profits had increased by 24 percent, said the Organization for Economic Cooperation and Development (OECD) on Tuesday in its employment outlook. Unit labor costs grew significantly more slowly at 13 percent. “The increase in unit profits is above the OECD average, while the increase in unit labor costs is below it,” is the conclusion. “The gap between the two values is significantly larger in Germany than in France, Italy, Spain and the United Kingdom.” Unit profit is the difference between revenue and cost per unit, while labor costs for a given unit are also called unit labor costs.
“In many OECD countries, profits have risen faster than labor costs, which is a major factor in price pressure,” OECD analyst Anja Meierkord told Reuters on inflation. That opens up scope to absorb further wage increases and thus cushion the loss of purchasing power, at least for low earners – without creating significant additional inflationary pressure. “This also applies to Germany,” said Meierkord. A fair distribution of inflation costs could prevent a further increase in inequality.
According to the OECD, the accelerated inflation after the Russian attack on Ukraine has caused real wages to fall in almost all of the 34 member countries surveyed. In Germany, they fell by 3.3 percent in the first quarter of this year compared to the same period last year. In the three years since the pandemic began – from late 2019 to late 2022 – real wages have fallen by 3.2 percent, the OECD average by 2.2 percent. In the case of low-income earners, this was cushioned somewhat by the increase in the minimum wage to twelve euros per hour last October. Adjusted for inflation (real), this rose by 12.4 percent compared with the beginning of 2022, more significantly than in most other OECD countries.
With an unemployment rate of 2.9 percent calculated according to international standards, Germany currently has one of the lowest of all OECD countries – despite the recession. At the same time, the economic outlook is clouding over. “According to OECD forecasts, the German economy will stagnate in 2023 because high inflation is reducing real income and savings and dampening consumption,” said Meierkord. However, the number of vacancies in Germany has recently fallen, as has the number of hours worked. “Against this background, the question arises as to whether the German labor market can continue to be as good,” said the OECD expert.
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