The recent rise in energy prices caused by the US attack on Iran could slash earnings for many workers in German industry, a new study by the Leibniz Institute for Economic Research in Halle (IWH) shows. Steffen Müller, an IWH economist, told “Der Spiegel” that a ten‑percent increase in energy costs leads to an average wage decline of 0.34 percent in the affected German manufacturing firms. A sharp price shock can almost wipe out regular wage growth, especially in energy‑intensive sectors. The analysis covered more than 20,000 companies between 2003 and 2017.
Müller also highlighted an asymmetric effect: when energy prices fall, firms do not pass those savings on to employees through higher wages. Wage changes occur only when conditions worsen. These impacts typically appear with a delay. “Wage effects do not show up after two weeks but only when the shock is lasting” he added.