Most companies pay inflation adjustment – economy

Almost three quarters of German companies have already paid their employees tax- and duty-free inflation compensation. This was stated by 72 percent of HR managers, as the Munich Ifo Institute announced in its survey on Wednesday. Another 16 percent are planning to pay out this bonus soon.

“The reason for paying out this bonus is, above all, a higher level of motivation among your employees,” said Ifo expert Daria Schaller. In 27 percent, the payment is also part of a collective agreement. Only twelve percent of those surveyed did not want to pay out a bonus. Since October 26, 2022, the inflation compensation bonus has allowed employers to grant their employees an amount of up to 3,000 euros tax- and duty-free. The federal government set this as part of the third relief package in view of increased energy prices. As the size of the company increases, the willingness to pay an inflation compensation bonus increases: for companies with 500 or more employees it is 93 percent, for smaller companies it is 84 percent. At 93 percent, industrial companies pay (completed or planned) more often than companies in retail (86 percent) and service providers (85 percent).

71 percent of the HR managers surveyed see the bonus as an additional opportunity to motivate employees. A good half (56 percent) take advantage of the tax advantage. 49 percent cite their competitiveness in the labor market as the reason. “Small companies primarily focus on the motivation of their workforce, while large companies pay more often when a collective agreement is concluded,” said Ifo expert Schaller. The possibility of paying out this bonus is valid until the end of 2024. This is a voluntary service. In some collective agreements, the bonus was also decided to be generally binding.