Background information

On average, collectively agreed wages have been rising by 1.7 percentage points in 2021 compared to 2020. With inflation rates around 3.1% this implies a loss in real wages. In many sectors and companies, social partners negotiated COVID-19 related bonuses to compensate for extraordinary burdens for employees due to the pandemic. From an economic and social perspective, these bonuses compensated at least partly for the losses in purchasing power due to inflation and can thus partly mitigate social hardship and stimulate consumption at the same time. However, it must be considered that special payments are a result of wage negotiations between social partners and might come instead of a (higher) percentage increase of the regular wage.

The government incentivised COVID-19 related special payments up to €1,500 by exempting them from tax and social security contributions until 31 March 2022, under the conditions that they do not replace any regular remuneration.

Content of measure

COVID-19 related bonuses have been negotiated between the social partners in many sectors and companies in 2021. These special payments are normally one or two-time extra payments which come on top of the regular salary. They are supposed to compensate employees for extraordinary burdens at the workplace during the pandemic. The level of the bonuses ranged from €90 in the confectionary industry to €1,300 in the public service of the German states.

The government supports these payments by exempting them from tax and social security contributions. Furthermore, for workers active in elderly and hospital care who directly work with COVID-19 patients, the German public health funds support the employers by co-funding bonuses with up to €100 million.

For 2022, the new government announced in their coalition agreement that they will arrange for a second extra payment for care workers with a level of up to €3,000. The government intends to co-fund these payments with €1 billion.

Use of measure

There is no full data set available. Here is a short overview with selected examples of COVID-19 related bonuses from the WSI 2021 collective bargaining report:

• February 2021: Textile and clothing industry - €325
• March 2021: Steel and metal industry - €500
• March 2021: Metal and electronic industry - €500
• March 2021: Helios Hospitals - €400
• April 2021: Volkswagen - €1,000
• May 2021: Confectionary industry North-Rhine-Westphalia - €90
• June 2021: Automotive craft Bavaria - €500
• October 2021: Public Service Hesse - €500 for 2021 + €500 for 2022
• October 2021 Construction - €500 West / €220 East
• November 2021: Public service of the states (without Hesse) - €1,300 in 2022

Contents

• Bonuses

Target groups

Workers	Businesses	Citizens
Applies to all workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Trade unions Employers' organisations Company / Companies	Companies National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Sectoral or branch level

Involvement

Social partners negotiate collective agreements including possible COVID-19 related bonuses in the framework of the social partners' autonomy.

Views and reactions

Social partners are responsible for the negotiation of collective agreements in the framework of the social partners' autonomy.

Sources

• 24 November 2021: Coalition agreement 2021
• 09 December 2021: WSI - Collective bargaining results 2021 (www.boeckler.de)