In a significant development for public service employees in Germany, an arbitration commission has proposed a compromise following failed negotiations between unions and employers. The commission, led by former Hesse Minister-President Roland Koch and former Bremen State Councilor Hans-Henning Lühr, recommended a structured salary increase for over 2.5 million employees in the federal administration and municipalities.
Starting April 1, 2025, employees are set to receive a linear salary increase of 3 percent, with a minimum increase of 110 euros per month. This will be followed by an additional 2.8 percent increase effective May 1, 2026. The proposal aims to address the pressing need for better compensation in light of rising living costs and the ongoing shortage of skilled workers in the public sector.
The arbitration process began on March 24, 2025, after initial collective bargaining efforts collapsed on March 17. The unions had been demanding an 8 percent increase, or at least 350 euros more per month, alongside additional benefits such as extra days off. However, the employers countered with a mere 5.5 percent increase spread over three years, which unions deemed insufficient.
“Given the very divergent positions of the bargaining parties, finding a compromise was challenging,” Koch stated, highlighting the complexities of the negotiation process. Lühr echoed this sentiment, noting that finalizing collective agreements in the current social climate is a complicated and demanding task.
The proposed agreement also includes an increase in the annual special payment, which could be partially exchanged for up to three days off for employees outside of hospitals and nursing facilities. Furthermore, the new collective agreement is expected to last for 27 months, with negotiations for ratification set for April 5, 2025, in Potsdam.
During the arbitration, a peace obligation is in effect, preventing strikes while discussions continue. This is a stark contrast to the previous weeks, where unions organized numerous warning strikes that affected public services, including hospitals, public transport, and educational institutions.
The backdrop of these negotiations is a looming crisis in the public sector, with forecasts indicating a future shortfall of over one million skilled workers. This shortage underscores the necessity for competitive salaries and improved working conditions to attract and retain talent.
As the negotiations progress, the stakes are high for the federal administration’s workforce, which includes a diverse range of roles from administrative staff to specialized IT professionals. The outcome of these discussions will not only impact salary structures but also set precedents for future employment conditions in the public sector.
With the arbitration commission's recommendations now in play, both unions and employers must decide on the proposed terms. Should the unions reject the recommendations, the possibility of indefinite strikes looms, which could further disrupt public services across the nation.
As the April 5 meeting approaches, the pressure is mounting on both sides to come to a resolution that acknowledges the needs of the workforce while addressing the financial constraints faced by employers. The outcome will significantly influence the working conditions and compensation of public service employees in Germany.
In summary, the proposed salary increases and additional benefits are seen as essential steps toward improving the working environment for public service employees. The upcoming negotiations will be crucial in determining whether these recommendations will be accepted or if further action, including strikes, will be necessary to achieve the unions' demands.
