all projects

Wage income developments 2025

Client

Bertelsmann Stiftung

Year

2020


Based on a moderate macroeconomic productivity dynamic, between the years 2017 and 2025, gross earnings will increase by an average price-adjusted 3,300 euros or a good 400 euros per year, taking them from an annual 30,500 euros to 33,800 euros per employed person. This is the conclusion of the “Wage income developments 2025 − Impact of productivity dynamics on individuals” study, produced by Prognos on behalf of the Bertelsmann Stiftung.

That being said, there are major differences between the industries: gross earnings per employee increase most strongly in absolute terms, with an increase of just under 6,000 euros (around 750 euros per year) in motor vehicle construction, and the least in the agricultural industry, with an increase of 1,400 euros (almost 200 euros per year).

Impact of productivity gains on individuals

Households also benefit to differing extents from this development: couples see the greatest increase, both with and without children. Single parents as well as single persons, on the other hand, are less affected, as they are more likely to work in industries with weaker productivity dynamics.

The gross earnings of women are significantly lower than those of men: as single parents are mainly women, they are more likely to work part-time and often in industries with low productivity gains, such as healthcare. While women will see an increase in their gross earnings of 80 euros annually between 2017 and 2025, the annual gross earnings of men will increase by 500 euros.

If the working population is divided into income classes, it appears that high earners benefit more from macroeconomic productivity dynamics than low earners. “By 2025, the wage gap will continue to open up,” explains Prognos project manager, Dr. Andreas Sachs. “The German tax and transfer system can only mitigate, but not eliminate, this increasing spread.”

Various scenarios

The above-mentioned results of the base scenario are even more pronounced if scenario calculations are used that assume exceptionally high macroeconomic productivity dynamics. Those who profit are, in particular, male workers who already take home above-average income and live in a couple household. Single-parent women on a low income, on the other hand, are much worse off.

Assuming exceptionally low macroeconomic productivity dynamics, male workers in couples benefit less, and the income gap with single women is slightly reduced.

Methodology

To quantify the differences between employed persons, this study combines macroeconomic forecasts with a detailed micro-data set and a microeconomic tax and transfer model.

The focus is on wage income development at the individual level for three productivity dynamic scenarios up to the year 2025. The respective productivity dynamics have different effects on the various industries. These industry-specific effects are linked to the continuation of the microeconomic employment and income situation on the basis of the socio-economic panel.

All of these calculations result in the development of gross hourly wages, gross earnings, working hours, and the disposable income of the individual or individuals. When determining disposable income, the actual composition of private households is taken into account.

To the study (PDF, in German)

Further info on the study (Bertelsmann website, in German)

Project team: Dr Andreas Sachs, Jakob Ambros, Jan Limbers, Dr Stefan Moog, Heidrun Weinelt

Last update: 08.12.2020

Do you have questions?

Your contact at Prognos

Dr Andreas Sachs

Project Manager

View profile

Our work on this topic

Take a look at our latest projects and activities.

Regional purchasing power of pensions

2023
| Project

Where in Germany is retirement particularly cheap and where has it become more expensive than average? Prognos examined this for the German Insurance Industry Association.

The economic and social situation of the creative professions

ongoing
| Project

In a comprehensive study, Prognos analyses the social and economic situation of freelance and hybrid working creatives. The results will serve as a basis for targeted improvements.

Pension at 63 – Quo vadis?

2023
| Project

Retiring at 63 is very popular. In 2021 alone, more than 270,000 people took the option of early retirement. These were the findings of our study for the INSM.

Inflation – extra burden and relief for family households

2022
| Project

Calculations on inflation-related additional private household expenditure and the work of the Federal Government's relief package.

No generational conflict: Young and old are primarily looking for security.

2022
| Project

Study compares “boomers” and Generation Z: high need for security for young and old alike.

The impact of corona testing on the economy and health care

2022
| Project

Corona tests are designed to help reduce the incidence of infection. Prognos has now quantified the benefits of testing on the economy and health care.

40+x? Social contributions in focus

2021
| Project

Due to demographic aging in Germany, social security contributions will rise to 46% by 2040. These were the findings of our calculations for the INSM.

Effects of the statutory minimum wage on pension development

2020
| Project

Does the statutory minimum wage have an influence on pension development and individual pension entitlements? Prognos investigated this on behalf of the Minimum Wage Commission.

Care Perspective. Reorientation of the elderly care profession

2019
| Project

The annual expenditure of social long-term care insurance will continue to increase in the coming decades according to the results of a Prognos study for the Bertelsmann Foundation.

The change of long-term care

2019
| Project

Prognos examined approaches to the further development of care professions and the prospects for the financing of the social long-term care insurance (SPV) up to the year 2050.

Integration: Strengthen cooperation between districts, associated municipalities & cities

2019
| Project

For the Robert Bosch Foundation, Prognos conducted a workshop with integration stakeholders from districts, municipalities, and cities.

Germany Report 2025|2035|2045

2018
| Project

Germany will become more global, more digital, greener and older in the next 30 years. This is shown by Prognos Deutschland Report from 2018/2019.

A reliable intergenerational contract?

2018
| Project

The Federal Government’s planned pension package would lead to significant additional expenditure on pension insurance and to permanent increases in pension contribution rates. These are the results of our study conducted on behalf of the INSM.

Women & retirement provision

2018
| Project

A stronger employment orientation for women can help to stabilise the public pension system – while also benefitting their own financial position in old age.

Calculation tool turns users into 'pension ministers'

2018
| Project

What are the financial implications of possible changes in the pension system? With the virtual calculation tool ‘Pension Minister’ central levers of pension insurance can be operated.

Future Family Report 2030

2016
| Project

This expert report looks at various scenarios. It shows that continued development of family policy has a positive impact on the economy as a whole.

Pension Perspectives 2040

2015
| Project

How high the pensions will be for a typical employee depends, among other things, on the occupation and the place of residence. This is the result of recent research by Prognos for GDV.

About us

Prognos – Providing Orientation.

Prognos is one of the oldest economic research centres in Europe. Founded at the University of Basel, Prognos experts have been conducting research for a wide range of clients from the public and private sectors since 1959 – politically independent, scientifically sound.

Learn more