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German public servants secure €10 billion pay rise

April 18, 2018

The deal came after more than 150,000 public sector workers went on strike across Germany. The European Central Bank has been closely watching the negotiations as it considers the future of its massive stimulus program.

Verdi chief Frank Bsirske with Interior Minister Horst Seehofer
Verdi chief Frank Bsirke (left) and Interior Minister Horst Seehofer (right)Image: picture-alliance/dpa/R. Hirschberger

German unions and public sector employers agreed in the early hours of Wednesday to raise wages for about 2.3 million workers by 7.5 percent over two and a half years.

The agreement will retroactively increase wages by 3.19 percent beginning March 1. Another increase of 3.09 percent will kick in on April 1, 2019, followed by a final raise of 1.06 percent on March 1, 2020.

Read more: Strikes in Germany continue as Verdi union leader warns of 'real trouble' ahead

Low-paid workers will also receive a one-time payment of €250 ($309), and public sector pay scales will be changed to make them more transparent.

The deal came after three days of talks and a series of countrywide "warning" strikes last week that caused hundreds of flight cancellations and disruptions to public services.

Read more: Germany: Flights canceled as public sector strikes begin

'I'm satisfied'

Interior Minister Horst Seehofer, who represented public sector employers in the negotiations, said the agreement would make public service work more attractive, but not cost the government too much.

"I'm satisfied. The public finances will not be overstretched," he said, adding that the wage increases would cost the federal government around €2.2 billion a year.

Municipal authorities, who were also part of the negotiations, would fork out an additional €7.5 billion, according to the Association of Local Government Employers.

Read more: Lufthansa to cancel over 800 flights amid mass public sector walkouts

Strikes in Germany

'Best result'

The services union Verdi, which had coordinated walkouts of more than 150,000 workers last week with the German Civil Service Federation (dbb), was pleased with the deal. "It is the best result in many years," Verdi chief Frank Bsirske said.

Both unions had gone into the final round of talks demanding that the federal and communal governments agree to increase wages by 6 percent or, at a minimum, by €200 ($250).

The Interior Ministry said it would introduce a law to expand the deal to cover civil servants, judges and soldiers.

The European Central Bank has been closely watching the negotiations. Any broad uptick in German wages could lift inflation in all Euro currency economies, which could weigh on the ECB as it considers whether to wind down a massive stimulus program.

Read more: Eurozone central bank inches toward stimulus exit

amp/aw (Reuters, dpa, AFP)

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