This year, record global inflation has spooked central banks and hit the pockets of office workers.
In the U.S., politicians such as President Joe Biden have bemoaned high commodity prices and even negotiated toughly with oil companies that “charge Americans with exorbitant prices.” But the government has not taken many measures that can directly affect people’s income.
Germany’s approach is quite different. The German government has announced that it will exempt inflation bonuses of up to 3,000 euros until 2024. German Chancellor Olaf Scholz said in September that companies could decide for themselves whether to pay inflation bonuses, but added: “I’m sure employees would be happy if they received a tax-free income on top of their agreed wages. “
According to Reuters (Reuters) citing a survey by Willis Towers Watson (WTW), a consulting firm, since the German government announced the new policy, many companies have provided some support to their employees, and about half of the companies expect to pay such a fee. Inflation bonus.
Volkswagen is the latest company to offer year-end inflation bonuses to German employees. Volkswagen announced last week that it would give employees a 3,000-euro after-tax bonus and an 8.5 percent pay rise for some workers for two years.
The company confirmed to Fortune that the bonus will be 2,000 euros in February 2023 and $1,000 in January 2024.
The company’s union negotiator, Arne Myswinkle, said: “The wage agreement cannot hide the fact that we must continue to keep a tight grip on costs. This is an essential premise for us to continue the transformation at the necessary speed and ensure competitiveness and employment opportunities.”
Other companies have announced similar decisions, only the inflation bonuses paid out by these companies are below the total tax-free limit set by the government. In early November, Deutsche Bank said it would hand out 1,500 euros to German employees. Commerzbank announced the €2,000 bonus a few days ago. Italian lender UniCredit said in November it would give German employees a one-off payment of 2,500 euros.
It seems that Italy has also taken notice of its German neighbors. The Italian government approved a 9 billion-euro subsidy package two weeks ago, part of which will be used to help local employers distribute tax-free bonuses. According to Willis Towers Watson, France and Austria are implementing similar policies.
While inflation bonuses are sure to be popular with workers, many unions are still negotiating tough wage increases with employers because wage deals finalized years ago did not take into account sudden increases in inflation.
Some countries that do not enforce government inflation bonuses also pay employees additional bonuses, but this is rare. British carmaker Rolls-Royce handed out £2,000 bonuses to staff and promised pay rises in July to help staff cope with Britain’s inflation. Lowes paid inflation bonuses to employees, what it calls “partners,” in August, but only a handful of firms in the U.S. have done so.
Marvin R. Ellison, Lowe’s CEO, said at the quarterly earnings call: “Partners do the most important work at our firm, and we appreciate their dedication to delivering a first-class customer experience. everything.” (Fortune Chinese Website)
Translator: Liu Jinlong
Reviewer: Wang Hao
Inflation hit record highs around the world this year, sending central banks into panic mode and hitting the pocketbooks of workers everywhere.
In the US, politicians like Joe Biden have bemoaned higher prices and even engaged in some tough talk about oil companies that “gouge the American people.” But the government has done little in terms of directly influencing the pay of citizens.
The picture looks very different in Germany, though, where the government said it would waive taxes on inflation bonuses of up to 3,000 euros through 2024. Chancellor Olaf Schlotz said in September that it’s up to companies if they want to implement those bonuses, but added: “I am sure that employees will be happy to receive a tax-and duty-free payment in addition to the agreed wage.”
Since the government announced the new policy, a slew of companies have stepped up to give their workers a little boost, and about half of companies are expected to pay those types of bonuses, Reuters reported, citing a survey from the WTW consulting firm.
Volkswagen is the latest company to provide an end-of-year inflation bonus for its German workers, announced at last week the company will pay them 3,000 euros after taxes, in addition to an 8.5% wage hike over a two-year time span to some specific employees.
That will be split up into a 2,000 euro payment in February of 2023, and a 1,000 euro payment in January of 2024, the company confirmed to Fortune.
“The wage agreement must not obscure the fact that we must continue to keep our costs strictly under control,” said the company’s union negotiator Arne Meiswinkel. “This is the basic prerequisite for continuing our transformation at the necessary speed and securing our competitives .”
Other companies have also made similar announcements, though they have given less than the total tax-free limit set by the government. Earlier November, Deutsche Bank said it would pay 1,500 euros to its employees based in Germany. few days earlier. And Italian lender UniCredit said in November that it would make a one-off payment of 2,500 euros to its German staff.
It seems that Italy is taking notes from its German neighbors. The Italian government approved an aid package worth 9 billion euros at two weeks ago, part of which will go to helping employers in that country pay out tax-free bonuses of their own. and Austria are implementing similar policies, according to WTW consulting.
While those inflationary bonuses will certainly be welcome news to workers, many unions are still struggling to negotiate higher wages after locking in agreements years ago that did not take the sudden inflation spike into account.
In countries that are not implementing government inflation bonus policies, some countries have given workers extra money, but they are more rare. British car manufacturer Rolls-Royce paid employees a bonus of 2,000 pounds and promised a wage increase in July to help them inflation in the UK and in the US, companies like Lowes offered inflation bonuses to its workers, which it calls associates, in August, though it is in the minority of companies to do so.
“These associates have the most important jobs in our company, and we deeply appreciate everything they do to serve our customers to deliver a best-in-class experience,” CEO Marvin R. Ellison said on a quarterly earnings call.
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