Employers raise pay – only managers outpace inflation

Three-quarters (75 %) of businesses state that they intend to grant pay rises to their employees in 2025, with the average increase ranging between 1-5 %.

The key reasons for salary increases, according to managers, are:

• Enhancing employee motivation and retention (50 %)
• Supporting employees with rising living costs (35 %)
• Promotions, tenure, or the achievement of specific targets (15 %)

The findings are based on the annual salary survey conducted by Robert Walters, a global recruitment consultancy. For the 2025 salary projections, 766 employees and 516 employers were surveyed to analyse current workplace trends.

Thomas Hoffmann, Managing Director for Germany, comments:

“In the past, salary increases were a recognition of performance, loyalty, or career progression. However, our survey indicates that they are now often granted for a different reason – namely, employers’ concern over losing their reputation and attractiveness.”

Minimal Salary Increases for Less Experienced Employees

The Robert Walters Salary Survey reveals that although the cost of living remains a key concern for employees, the average salary increases range between 1-5 % – aligning closely with the current inflation rate of 2.2 %. This means that many salary adjustments merely compensate for the loss of purchasing power rather than resulting in a real income gain.

A different picture emerges for senior executives, leadership teams, and managers, who can expect increases of around 10-15 %.

A senior executive earning approximately €100,000 will see an additional €13,500 in earnings this year if they receive the expected 13.5 % raise.

Thomas Hoffmann explains: “It is no surprise that this level of salary increase is found at the higher end of the spectrum. In uncertain times, businesses rely on experienced talent, intensifying competition for professionals with industry expertise, particularly in leadership roles. In such times, salary and job security become the main drivers of attraction.”

What Matters to Employees Now

The Robert Walters Salary Survey highlights the factors that professionals currently value in their employer:

• Competitive salary and benefits
• Flexible/hybrid working models
• Support for work-life balance
• Job security

“While it may be tempting for employees to accept an inflated salary offer from another company, we advise caution. The high demand for skilled professionals has driven salaries up in many industries. At the same time, companies are increasingly investing in internal training and nurturing junior talent to reduce their reliance on external hires in the long run. Once the job market stabilises – and it will – companies will face a new challenge: scrutinising their personnel costs and assessing whether high salaries remain sustainable. In times of economic strain, this could lead to redundancies, particularly in overstaffed or excessively costly positions. We saw similar trends during the pandemic, when significant cuts were made, particularly at middle management level,” adds Hoffmann.

Companies Compensate with Additional Benefits

Two-thirds of employers expressed concern about losing employees whose salary increases fall below the inflation rate.

To counter this, businesses have increased their investment in workplace culture, office environments, and additional benefits.

The most popular benefits cited by employees in the Robert Walters Salary Survey include:

• Company car/car allowance
• Occupational pension scheme
• Company shares/equity options
• Workation opportunities
• Sabbatical leave
• Private health, travel, or life insurance
• Gym membership
• Company-sponsored bicycle scheme
• Dental care
• Training subsidy
• Mortgage assistance

Click here to explore further salary and labour market trends in our Robert Walters Salary Survey 2025.