German unions seek 10.5% pay rise for public-sector workers

GERMAN public-sector workers are demanding a pay rise of 10.5 per cent for 12 months – kicking off a new round of negotiations seeking to recoup income lost to the fastest inflation in decades.

The talks cover as many as 2.5 million employees and civil servants from the country’s provinces in areas including the justice system, tax authorities, universities and childcare. 

A tight labour market is underpinning the robust demands. With 300,000 vacancies in the country’s public sector, people in many institutions are working beyond their limits, Frank Werneke, head of the Verdi union, said on Wednesday (Oct 11) in a statement.  

Three rounds of talks with employers are scheduled to be held until the first half of December. In April, the labour union agreed to a separate deal on pay increases for public-sector staff through a combination of one-time payments and permanent salary hikes – also after seeking 10.5 per cent initially. 

“The situation and the demand are the same as in the spring: Inflation is eating up employees’ income,” said Ulrich Silberbach, head of the German Civil Service Federation. “We have to compensate for that now.”

Workers’ pay is a key factor for the European Central Bank as it determines whether interest rates are high enough to bring inflation back to the 2 per cent goal. It currently projects compensation per employee to rise by 4.3 per cent in 2024 and 3.8 per cent in 2025. 

SEE ALSO

German economy to shrink 0.6% in 2023 before wages drive rebound

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“An important marker for us will be the development in wages,” Dutch central bank chief Klaas Knot said earlier Wednesday in Marrakech. “If there were to be a material deviation in the behaviour of wages from the development that underlies our projections, then of course we would have to respond to that.” BLOOMBERG