Critical Negotiations for Public Sector Wages: Strike or Settlement?

In a pivotal moment for over 2.5 million employees in federal and municipal services, negotiations over wages and working hours are intensifying. Following a mediator's proposal, unions and employers are seeking to reach a collective bargaining agreement.

Since January, labor unions and employers in the public sector have been engaged in discussions regarding income and work schedules, leading to multiple warning strikes in various sectors including daycares, hospitals, airports, and waste management services. Today, the negotiations take center stage in Potsdam, marking a crucial round for public sector workers.

The discussions are based on a proposal from mediators, and the stakes are high. If an agreement cannot be reached, the unions may call for a referendum on indefinite strikes.

The negotiations reached an impasse in mid-March after the third round, prompting the initiation of a mediation process. The mediation committee, consisting of representatives from both unions and employers and chaired by mediators Roland Koch (CDU) and Henning Lühr (SPD), developed a compromise proposal that reportedly received substantial support. The current focus is on whether the negotiating parties will accept the proposal, renegotiate terms, or ultimately fail to reach an agreement.

The mediators recommend a two-phase increase in wages. Starting April 1, 2025, wages would rise by three percent, with a minimum increase of 110 euros per month. A further increase of 2.8 percent is suggested for May 1, 2026. The proposed duration of the new collective agreement is 27 months.

In addition to wage adjustments, the mediators propose several enhancements. Starting from 2026, annual bonuses will see an increase, and employees in non-hospital settings will have the option to convert parts of their annual bonuses into additional days off. Furthermore, the proposal suggests an additional vacation day for these employees beginning in 2027.

Flexibility in working hours is also on the table. The proposal includes allowing employees to voluntarily extend their weekly working hours to up to 42 hours starting in 2026. Additionally, the mediators recommend improvements to regulations regarding long-term accounts, flexible working hours, and the working conditions of emergency services.

From July 1, 2025, allowances for shift work are set to increase to 100 euros, while those for rotating shift work will rise to 200 euros. There is also a plan to harmonize working conditions between East and West in the federal sector, and local governments are encouraged to modernize the classification of midwives and obstetric nurses.

Initially, the unions Verdi and dbb Beamtenbund demanded an eight percent wage increase, with a minimum of 350 euros more per month, in addition to at least three extra days off annually. The employers deemed these requests financially unviable. The municipal employers' association VKA and the Federal Ministry of the Interior are representing the employers in these negotiations.

In the third negotiation round, employers reportedly offered a wage increase of 5.5 percent, along with a higher 13th month's salary and increased shift allowances, though the duration of the agreement remained unspecified. The unions found this offer insufficient, leading to the employers calling for mediation due to a perceived lack of movement from the union side.