Unions Demand Seven Percent Pay Increase for Public Sector Employees

German trade unions have initiated a new round of wage negotiations for approximately 850,000 public sector employees at the state level, calling for a seven percent salary increase or at least an additional 300 euros per month. The unions involved include Verdi, the Civil Service Federation, and sector-specific groups representing education and law enforcement professionals. Their primary objective is to maintain the public sector's competitiveness in attracting and retaining skilled personnel amid ongoing labor market challenges.

The wage talks are set to commence in December, with expectations that discussions may extend into mid-February. The outcome will impact not only state-employed workers but also 1.2 million civil servants, about 900,000 state pensioners, and roughly 300,000 municipal employees entitled to pensions.

Representatives for the states, led by the finance senator of Hamburg alongside senior officials from Saxony and Schleswig-Holstein, will negotiate on behalf of the employers. The states' negotiating team has expressed reservations about the unions' demands, labeling the proposed increase as disproportionate given the current inflation rate of around two percent. They caution that such high expectations may lead to disappointment among public sector workers if not realized.

This negotiating round follows a recently resolved dispute involving federal and municipal employees. In that instance, unions initially sought an eight percent raise, a minimum of 350 euros more per month, and additional paid leave. Following mediation, a compromise was reached that included a three percent pay increase in April 2025, an additional 2.8 percent from May 2026, and extra vacation benefits, including the option to exchange part of the annual bonus for up to three days of leave.

In the last agreement with the state governments, excluding Hesse, unions secured a pay increase of 200 euros per month effective November 2024, followed by a 5.5 percent raise in February 2025, and a one-off inflation compensation payment of 3,000 euros. This package resulted in a permanent rise in personnel costs estimated at 11.11 percent, with total expenditures reaching nearly 24 billion euros, distributed over three fiscal years.

State finance leaders have highlighted the strain on public budgets due to ongoing economic pressures, combined with difficulties in recruiting and retaining qualified staff. They argue that while fiscal prudence is necessary, competitive salaries are essential for ensuring the public sector can meet future demands.

Union leaders maintain that improved compensation is critical to safeguarding the public sector's ability to deliver high-quality services and address upcoming societal challenges. They emphasize the need for fair and performance-based remuneration, especially as the states face increasing competition for talent from private employers.

The current negotiations are being closely watched, as their outcome will set the tone for public sector employment conditions in the coming years, affecting a significant portion of Germany's workforce. Both sides anticipate challenging discussions as they seek common ground between fiscal responsibility and the need for attractive employment terms in the public sector.