Discussing your salary among peers is not a common practice in Germany and some companies actively discourage mentioning your compensation to colleagues. It’s no wonder then that the German approach to negotiating your salary is different from what expats might be used to in their home country. We’ll give you an introduction and tips on how to negotiate your salary in Germany.
Salary negotiations in Germany
The issue of compensation can come up during a job interview already, but salary negotiations commonly begin when an employer extends a job offer with an attached salary proposal. The applicant can either accept that offer or try and make demands for a higher compensation.
As a rule of thumb, a first offer is not exploitative and more or less reflects the market value of the position and the applicant, leaving less “wiggle room” and making it unlikely that an employer will agree should you shoot for the moon with your demands. Quoted salaries are in euros and before taxes and deductions and without bonuses or benefits.
The following factors will come into play during salary negotiations in Germany:
- Your past work experience and degrees
- The position and responsibilities
- Industry and sector differences
- The size and type of the company (small, large, startup, big player)
- Regional salary gaps or collective tariff groups
Positions for which you can and cannot negotiate your salary
Germany only introduced a legal minimum wage of €8.50 per hour in 2015. The country has a long history of collectively agreed wages, meaning that for many positions, a trade union (“Gewerkschaft”) is negotiating an agreement for you which stipulates wages, rights and obligations between employer and employee. Such a “Tarifvertrag” typically applies to sectors with blue collar jobs, whereas white collar jobs commonly have no collective agreements and it falls upon you to negotiate your salary.
Salary negotiations during the hiring process
Before you begin salary negotiations for a full-time position in Germany, do your research: understanding the position for which you’re interviewing and the salary structure in your industry gives you a better hand in the process. Consult the industry average and rate tables, ask associations and look up the German Federal Employment Agency or use an online salary calculator to arrive at an average salary for your position.
Determine the high and low value to not lose sight of your desired target salary during negotiations. Always state a gross amount as the net salary depends on too many personal factors. Companies tend to have a margin for negotiation, but might also have a fixed budget which they cannot exceed. The margin will vary, but don’t expect it to greatly exceed between €1,000 and €5,000 a year.
The base salary is the most important part of your compensation for a job in Germany. You’ll be paid the same amount each month, therefore allowing for planning and financial stability. Most employees prefer a conversative model favoring a high base over benefits and other forms of compensation. The base salary can increase after an initial probation period, which gives you some leeway during negotiation.
Additional compensation models can be profit-sharing, a performance-based bonus for each quarter or at the end of the year as well as stock options which you can exercise after a certain period of time.
In addition to compensation, German companies can offer you benefits, which can be part of the negotiation process as well, though they play a bigger role when comparing individual job offers from two different employers. Note that healthcare is not part of job benefits since it’s mandatory in Germany, though employers may offer perks around employee health. Attractive German job benefits can include:
- Free food and drinks, meal vouchers or a company canteen
- Free or subsidised public transport
- A company car and free parking
- Gym membership or other health related perks
- Childcare and time off for family or personal issues
- Remote work and home office options
- A company pension scheme
- A 13th and 14th salary
- Choice of hardware, software, device or tool
- Training, certification and further education at the expense of the employer
Asking for a raise in Germany
Once you’re locked into a work contract in Germany, it can be considerably harder to negotiate your salary without a change in circumstances. The average yearly salary increase is around three percent, depending on market pay and company budget.
When changing jobs or companies, you can expect a salary increase of roughly seven to 15 per cent. However, it is not common in Germany to match a competing offer unless you can prove you’re currently paid below average.
The best approach to asking for a raise in Germany is to highlight your value and your contributions to the company. Any improvement in efficiency or skills such as language skills, training, courses and certifications is a plus. Depending on the job, you might have to negotiate with human resources instead of someone working above you. In that case, obtain testimonials from coworkers and managers or get someone to lobby on your behalf.
Tips for negotiating your salary in Germany
Apart from what we’ve outlined above the following tips will help you successfully negotiate your salary for a position in Germany:
- Prepare: Research salaries in your industry and area, but also prepare to list your impact and contributions in the position. Understand your long term perspective within the company and learn about the salary structure.
- Set your objectives: Know your priorities, such as base salary, compensation model or perks. How much do you value free time, work-life-balance, responsibilities, managerial duties and growth and development possibilities?
- Alternative offers: Interviewing for several positions at the same time always helps to determine your market value. Some applicants manage to aggressively leverage one offer against another to negotiate a high salary, but be aware that German employers might feel threatened if you use this tactic.
- Negotiation style: Salary negotiations are basically a conflict of interest where a win-win seems unlikely. Two different styles focus on competition or collaboration: you can make demands based on your worth, or you can offer value.
- Satisfaction: It’s hard to put a price on job satisfaction, but try to be aware of how much your income will contribute to your overall job satisfaction. Compensation aside, how long do you see yourself working in that position?
- Needs: What kind of salary do you need to fund your life in Germany? Tally your costs for rent, necessities and other expenses. Also use a “Brutto-Netto-Rechner” to calculate the net salary from your gross salary to understand how much will be left after taxes and deductions.
- Resources: You can use platforms such as Gehalt.de, LinkedIn, Glassdoor or Xing for salary insights across sectors and positions in Germany.
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