Can wages be increased sharply without danger? The case of Germany

Wages have risen rapidly in Germany in recent years, up until the COVID crisis, due inter alia to the introduction of a minimum wage in January 2015. The example of Germany then raises the question of whether it is possible to increase wages sharply without danger? With the specificities of Germany in mind (high labour force skills, high level of product sophistication), we look at the effect of rapid wage increases: On employment, especially low-skilled employment; On household demand; On cost competitiveness and exports; On profitability and investment; And altogether on growth and potential growth. We have seen i n Germany since 2015: An obvious deterioration in cost competitiveness and profitability; But without any major negative impact on employment, exports or investment; Without a positive impact on household demand; And altogether with a slight weakening of growth.