Volkswagen gives of German employees thousands in inflation bonuses after several german companies do the same

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Inflation hit record levels around the world this year, sending central banks into a panic and hitting the pockets of workers everywhere..

In the US, politicians like Joe Biden have complained about higher prices and have even engaged in some tough talk about oil companies that “tear the American people apart.” But the government has done little in terms of directly influencing citizens’ pay.

However, the picture looks very different in Germany, where the government said that exempt taxes on inflation bonds of up to 3,000 euros until 2024. Chancellor Olaf Schlotz said in september that it is up to the companies whether they want to implement those bonuses or not, but he added: “I am sure that the employees will be happy to receive a payment free of taxes and duties on top of the agreed salary.”

Since the government announced the new policy, a large number of companies have scrambled to give their workers a little boost, with about half of companies expected to pay such bonuses. Reuters reportedciting a survey by the WTW consultancy.

Volkswagen is the latest company to offer a year-end inflation bonus for its German workers, announcing this week the company will pay them 3,000 euros after taxes, in addition to a salary increase of 8.5% for two years for some specific employees.

That will be split into a €2,000 payment in February 2023 and a €1,000 payment in January 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 to continue our transformation at the necessary speed and to secure our competitiveness and jobs.”

Other companies have also made similar announcements, although they have given less than the total tax-free limit set by the government. Earlier this month, Deutsche Bank said it would pay 1,500 euros to its Germany-based employees. commerzbank announced a bonus of 2,000 euros a few days before. and Italian moneylender UniCredit it said in November it would make a one-time payment of 2,500 euros to its German staff.

It seems that Italy is taking note of its German neighbors. the italian government approved an aid package worth 9,000 million euros last week, part of which will go to help employers in that country pay their own tax-free bonuses. France and Austria are implementing similar policies, according to wtw consulting.

While those inflationary bonuses will certainly be good news for workers, many unions are still struggling to negotiate higher wages after striking deals years ago that failed to account for the surge in inflation.

In countries that are not implementing government inflation bonus policies, some countries have given workers extra money, but these are rarer. British carmaker Rolls-Royce paid employees a £2,000 bonus and promised a pay rise in July to help them cope with UK inflation. And in the US, companies like Lowes offered inflation bonuses to their workers, whom it calls associates, in August, although it is a minority of companies that do so.

“These associates hold the most important jobs in our company and we deeply appreciate all they do to serve our customers and provide them with a best-in-class experience,” Chief Executive Officer Marvin R. Ellison said in a quarterly earnings call.

November 23, 2022: This story has been updated with a comment from VW.

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