Salary increases are necessary to offset inflation
The reason for this is the inflation target of the European Central Bank. The records of the Federal Statistical Office since 1991 show that the percentage change in the consumer price index in Germany has always been positive. In 2018 and 2019, for example, prices increased by 1.9 and 1.4 percent respectively compared to the previous year. If you compare these figures with the development of nominal wages, you will find that the nominal increase in salary alone does not say anything about whether you really earn more money in real terms. According to the Federal Statistical Office, average nominal wages in Germany rose by 3.1 percent in 2018, but after deducting inflation, the real salary is only 1.3 percent higher – in 2019 it was only 1.2 percent. If the nominal wage increase is even lower, it may be that even less of the wage increase remains.
This means that even if you are satisfied with your current salary, you should regularly negotiate with your employer about salary increases. Because a lack of salary increase actually has the effect of a “salary reduction” due to the positive inflation rates. Therefore, the percentage increase in wages should behave at least in line with inflation rates.
Changing jobs can lead to a 10 to 20 percent increase in salary
In contrast to earlier times, it is by no means so obvious nowadays to work in the same company for the rest of your life. What’s more, some experts even advise actively changing jobs in order to improve one’s own financial situation.
Economics expert Cameron Keng, in an article in the business newspaper Forbes, calculated how much money is lost by workers who stay in the same company for years: “If you stay in the same company for more than two years on average, you will earn over the course of your Live 50 percent less,” claims the expert as a result of his research. Because according to him, the average salary increase that an employee receives when changing jobs voluntarily is between 10 and 20 percent – and thus significantly higher than the expected salary increase in a permanent, long-term employment relationship.
Employers are also trying to “lure” you with other offers. In addition to a salary increase, it may also be possible to achieve more flexible working hours or a promotion in the job position.
Salary increase when changing jobs depends on the industry
Of course, these numbers always depend on the individual conditions and the employee’s industry; Nevertheless, according to the expert, it is worth changing jobs regularly. The financial difference can be particularly large, for example, in sectors with a shortage of skilled workers, since the pressure on employers is increased here.
Changing jobs should be consistent with the employee’s life situation
However, the Forbes article points out that a job change should also depend on other factors. So while so-called “job hopping” can be very promising in terms of salary, Andrew Bauer, CEO of Royce Leather, also advises considering effects such as “quality of life, mental health, physical health and better moral standards”. According to the expert, a job change is only really advisable if these also correspond to the life situation of the employee.
Pauline Breitner / Editor finanzen.net
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