Tackling inflation at its root means, above all, capping the exorbitant energy prices. Introducing a cap on electricity and gas prices.
As early as April, IG Metall pushed for this in Berlin—with over 10,000 works council members and union representatives from 4,000 companies. Over the summer, around 200,000 people participated in our petition campaign “Skim off crisis profits—cap costs!”
This campaign was ultimately successful. IG Metall’s key demands are becoming a reality: In December, the government will cover the advance payments for gas and district heating customers. In September, a 300-euro energy allowance was provided for workers, and in December, one for retirees. Starting in January, the electricity and gas price cap will take effect.
Price caps for electricity and gas
The electricity and gas price caps will take effect in March 2023 but will also apply retroactively to January and February. Households will then pay 12 cents per kilowatt-hour for 80 percent of their gas consumption and 9.5 cents for district heating. For 80 percent of electricity consumption, the maximum rate will be 40 cents per kilowatt-hour.
Additional relief measures are included: lower income tax, higher child benefits, full tax deductibility of pension contributions, and more.
We’ve calculated the total savings these measures will provide for average earners in 2023*.
Example 1: Single
Single, employed in the metal and electrical industry, gross monthly income of 3,500 euros in 2022.
This person will see a tax relief of 1, 083 euros in 2023.
The majority of the relief comes from the gas price cap and the tax deductibility of pension contributions.
Example 2: Family
Married couple with two children and two incomes: one in the metal and electrical industry (M+E) of 2,700 euros per month (gross), and another of 1,800 euros per month (outside the M+E sector). The second income increases by three percent. Both are in tax bracket IV.
This family will receive a tax relief of 3,190 euros in 2023.
The majority of the relief comes from the gas price cap and the increase in child benefits.
The overall package is making a difference
Together with the metal and electrical sector wage agreement and other collective bargaining agreements, these relief measures represent a significant boost to the household budgets of millions of workers.
This will be even more true as inflation continues to ease. Economists and the European Central Bank expect the inflation rate to trend downward again—not back to 2020 levels, but at least to rates significantly lower than this year’s.
*The calculations illustrate, by way of example, how the federal government’s relief measures affect workers with average energy consumption. To facilitate comparison, we have not included all relief measures. The new income tax schedule is not included here; it provides additional relief.
