German Bundestag

German MPs to take first ever pay cut

Salaries of the German MPs will fall for the first time in history from 1 July

German MP salaries are set to drop for the first time in history, according to the Bundestag administration.

Since 2014, MP’s salaries have been linked to Germany’s average monthly earnings. The coronavirus pandemic saw nominal earnings drop by an average of 0.7% in 2020, according to the Federal Statistical Office (Destatis). As a result, MP pay will fall by around € 70,58 (£61,30) from 1 July.

“When all citizens have to limit themselves financially due to the pandemic, it should apply to the MPs as well,” said Yannick Bury, an MP candidate from Chancellor Angela Merkel’s CDU party who will be up for election when the country goes to the polls in September.

Since the beginning of the German Parliament, MP’s basic salaries, so-called “diets”, have never subsided. MPs are not required by law to change their earnings. Just last year, Parliament decided against an increase in their pay because of the pandemic, even though nominal wages had risen in 2019. For Bury,  a pay cut is, however, “a correct and vital sign”.

Thomas Seitz, the MP from the AfD (Alternative for Germany) party agrees, claiming:

“In my view, the problem with us is not the amount of compensation, but the number of MPs (709). This must be radically reduced”.

Both politicians argue that the issue of MPs’ “Nebeneinkünften”, an extra income from activities outside the political mandate, is a more contentious one, and requires more regulation than basic salaries.

In the wake of the coronavirus, average earnings in 2020 were strongly impacted by “Kurzarbeit“; Germany’s state-sponsored short-term work programme in which employers reduced working hours instead of laying off workers. Employees received 60% of their pay for any hours not worked while receiving full payment for those worked. In the same period, consumer prices rose by just under 0.5%, while real wages were down even by 1.1%.

On whether the economic stagnation and pay cuts are an indicator of poor political performance, the politicians’ opinions differ. The MP candidate Bury (CDU) does not believe the problem is restricted to Germany, claiming that all countries have been hit hard economically.

“I would not say that there have been management errors in the corona policy, but rather economic consequences of the lockdown in 2020,” he said.

The AfD MP Seitz has a low opinion of the lockdown’s efficacy, claiming that negative consequences for the economy could have been diminished.

“From my point of view, it is a political failure of the government, which did the wrong thing at all times,” Seitz says.

His future prognoses for the German economy are less optimistic.

“I fear that we are just at the beginning of the economic crisis instead of overcoming it,” he said.

The CDU MP candidate Bury, however, expects the economy to look up soon.

“If we look at the economic forecasts of all leading economic institutions, we can expect, from the third quarter at the latest, that economic performance will pick up again, the labour market will revive, and that economic growth will have a positive impact on nominal wages,” he said.

 

People’s response to the lowering of MP’s salaries

According to a survey conducted by The Breaker of 113 people of different ages, genders, and all walks of life, most Germans welcome the reduction of MP’s salaries. Just over 86% of respondents considered it fair that MP’s earnings decrease when the country’s average earnings have shrunk.

Dirk Sowinski, a German entrepreneur from Leipzig, however, regards things differently to most. He claims MP’s salaries are too low.

Article 48(3) of the Basic Law for the Federal Republic of Germany stipulates adequate pay for MPs to ensure their independence and reflect the office’s responsibility.

Mr Sowinski doesn’t deem £8,768 adequate for ensuring MP’s independence. Nor does he consider the amount reflective of the responsibility Members of Parliament hold.

“What is € 11,000 a month in politics? In business, one earns a 0 more,” the forty-one-year-old man said. “I am for higher salaries and a ban from MP’s membership on state supervisory boards,” he suggested instead.

That being said, both MP candidate Bury (CDU) and the MP Seitz (AfD) consider £8,768 as an appropriate salary for an MP.

For Bury, membership on state supervisory boards is OK if it is volunteering. However, politicians should never use their mandate to generate any other income from it. He said:

“The causality – you become a member of the supervisory board because you are a member of parliament – must be excluded”.

MPs determined their own salaries in the past.

There was not always a link between MP earnings and average earnings in Germany. Until 2014 MPs determined their own salaries and pay increases. The increase in MP wages, however, regularly led to publicly contentious debate.

To avoid general discontent, the MPs decided in 2014 to adapt their income to changes in average earnings of German employees across all sectors, the so-called nominal wage index.

MP salaries are equivalent to that of judges at a federal supreme court in Germany. Members of the Bundestag currently receive a taxable compensation of 10,083.47€ or £8,768 with no additional annual payments such as holiday pay or Christmas bonuses.

MPs’ monthly compensation increases automatically towards the middle of the year and has been adjusted once a year on 1 July since 2016.

What MPs’ pay in the UK looks like?

With a basic annual salary of £81,932, British MPs are paid significantly less on average compared to their German counterparts, who get around £23,000 more.

Since 2015 annual changes in British MPs earnings are linked to changes in average incomes in the public sector, rather than those in the economy as a whole like in Germany, as previously proposed by the Independent Parliamentary Standards Authority (IPSA). Like in Germany, MPs pay in the UK rose consistently until 2020.

Despite a slight growth in average earnings in the public sector, MPs’ pay for 2021-22 remained unchanged. The COVID-19 pandemic has had a different effect on public and private sector earnings. Therefore, the IPSA Board considered a salary increase for MPs inappropriate and not reflective of British people’s reality.

After a parliamentary expenses scandal in 2009, the IPSA, an independent body, has been regulating and administering 650 MPs’ costs and pay in the UK.

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