Germans Are Waiting for the Penny to Drop

(Bloomberg) -- The German economy is all about records. Highs and lows.

Never in the 27 years since the country's reunification have more people held a job. Never have fewer people been unemployed. Companies haven't assessed the business climate more positively and consumers have never been more optimistic about future income.

That's where the records end.

Wage growth is lagging the economic trend, and is one of the main reasons why inflation remains uncomfortably low for policy makers watching over the health of Europe's largest economy and its peers. It's a phenomenon seen all over the world in an age of globalization: Pay growth is falling short even as labor markets tighten after years of unprecedented monetary stimulus. 

Fear not is Rolf Buerkl's message. The economist at Germany's GfK society for consumer research predicts salary increases will accelerate.  

“In many sectors, we have a shortage of skilled workers, so negotiation positions are better than in times of high joblessness,'' he said in an interview Thursday. ``If employment continues on its path, one doesn't have to be a prophet to expect higher incomes.”

Measures for German salary and wage growth are manifold. One thing they have in common is the fact that increases in the years since the euro area's sovereign-debt crisis are trailing those previously recorded.

Which begs the question whether consumers' income expectations are foreshadowing an overdue pickup in compensation or will turn out to be unrealistic.

“Consumers have a pretty good sense for trends,” said Buerkl. “Income growth in the recent past suggests that their optimism isn't unfounded.”

To contact the author of this story: Jana Randow in Frankfurt at jrandow@bloomberg.net.

To contact the editor responsible for this story: Jonas O Bergman at jbergman@bloomberg.net.