Earning opportunities in Germany

Please note that the gross monthly salary is always specified in the employment contract. Social security contributions and taxes are automatically deducted from this salary before you receive the money. So you don’t get “cash in hand” what is in your contract, but about 30-40% less. How many social security contributions are deducted from your gross salary depends on whether you have children and which health insurance fund you are insured with. The wage tax deduction depends on your marital status and the amount of your salary.

In principle, only short-term (maximum 3 months or 70 working days per calendar year) and marginal employment (up to €538 per month) are exempt from social security contributions. Short-term employment is particularly worthwhile for foreign employees who work in seasonal business, for example as harvest workers or in the tourism industry. Wage tax is still due, but there are different ways in which it can be paid. The employer often pays a flat-rate wage tax for such employment.

For normal employment subject to social insurance contributions, a rounded 7.5% is deducted from your gross salary for health insurance, around 2.5% for long-term care insurance, 1.3% for unemployment insurance and almost 10% for pension insurance. Roughly speaking, this adds up to contributions of 21%, not even taking payroll tax into account.

Your employer also pays additional social insurance contributions on top of your gross salary – roughly in the same amount as what is deducted from your salary.

A German employee with a gross salary of €2,500 therefore only receives a net payment of around €1,750 with the most unfavorable taxation, but costs the employer a total of around €3,000. This correlation should be taken into account during salary negotiations.

Within the EU, Germany is the country with the second-highest social security contributions after Belgium. Nevertheless, average earnings in 2022 will still be in the top third of EU countries.

So working in Germany is still worthwhile. In 2024, the average gross salary was €4,323, which corresponds to around €2,750 net. However, salary negotiations should not be based on the German average, as a few employees in management positions earn particularly high salaries and are therefore statistical outliers. More meaningful would be the median, which in 2024 is €3,600 gross and therefore around €2,400 net. For foreign employees with basic specialist knowledge and German language skills at B1 level, net earnings of between €1,800 and €2,300 are realistic. As a general rule, the better your German language skills, the higher your professional qualifications and the longer your professional experience, the higher your salary will be.

The wage floor is definitely the minimum wage, which applies without restriction to all people working in Germany.

The minimum wage

In 2024, the general minimum wage will be €12.41 gross per hour. As a single person without children, this comes to around €1,560 per month, and as a married person in tax class 3 with two children to around €1,710. On January 1, 2025, it will rise to €12.82 per hour.

Irrespective of the general minimum wage, there are numerous industry minimum wages in Germany that are binding for all employers. For example, employees of temporary employment agencies and cleaning staff receive at least €13.50 per hour and unskilled care workers even €15.50 per hour (from 01.05.2024).

The minimum wage may also not be circumvented by a piece rate.

Smart earning models

You can effectively supplement your net salary with social security and tax-free benefits, such as additional expenses for meals. If you go on a business trip and exceed the working time of 8 hours, your employer can pay you an additional meal allowance of €14 per day, or even €28 if you spend the night away from home. With 10 assembly days and one arrival and one departure day, you can easily earn an extra €304 if you manage to eat sparingly on the road. The voluntary inflation bonus, which some companies pay out to their employees in installments, is also exempt from social security contributions and wage tax. A total of € 3,000 can be paid out to an employee as an inflation bonus until the end of 2024. As a result, net earnings can also be topped up with a monthly inflation premium. Furthermore, an employee can be granted monthly benefits in kind in the amount of €50 free of tax and social security contributions, e.g. in the form of a shopping voucher.

So when negotiating your salary, pay particular attention to additional expenses for meals, benefits in kind and bonuses, as these can make a big difference to your net earnings in cases of doubt.

Payroll accounting

When you take up employment, you will receive a confirmation of registration for social insurance from your employer. You will also receive a monthly payslip showing you the social security contributions and wage tax paid in the previous or current month. Above all, check the number of hours worked and your gross salary for plausibility. You must keep your payslips, subsequent annual income tax statements and social security registration confirmation in a safe place.

You can make a trial calculation here.

You can find more information on the tax class here.