To Pay or Not to Pay: Wage Variations in Germany and France

The eurozone’s two economic powerhouses are often contrasted. Germany is frequently portrayed as the star pupil, with a dynamic economy and a thriving manufacturing sector. France, on the other hand, is seen to be a laggard, weighed down by a rigid economy that underperforms.

Of course, the reality is that both countries’ economies have been pretty much stagnant over the past year. Nonetheless, there is a grain of truth in the oft-wheeled-out cliché: on the whole, Germany’s economy has largely outperformed France’s since the turn of the century.

The question then is why is this so. One way of providing an answer is to take a look at wage variations across different industries in both countries to try to determine their impact on economic performance.

Recent studies have shown Germany’s wage disparities between sectors and levels of qualification to be crucial to the competitiveness of its export industry. France Stratégie has taken these a step further in a recently published study, drawing on the Eurostat Structure of Earnings Survey to compare
the distribution of wage variations in the two countries and better understand their economic impact.

It found that while the average cost of labour is unsurprisingly lower in Germany than in France (9.2% less in non-agricultural sectors in companies with more than 10 employees), average gross hourly wages are in fact higher in Germany across all major industries, save business services.