In a significant development for public sector employees in Germany, arbitration has been initiated following unsuccessful tariff negotiations between unions and employers. The arbitration process primarily affects administrative employees in municipalities who are compensated under the TVöD VKA (Collective Agreement for the Public Service - Federal Association of Municipal Employers). After three rounds of negotiations failed to yield an agreement, the process officially commenced on March 18, 2025, with the aim of reaching a settlement recommendation by April 1, 2025.
The arbitrators have proposed a two-stage salary increase for approximately 2.5 million public sector employees, particularly those working in municipal administrations, district offices, public utilities, daycare centers, and construction yards. The first increase of 3% is set to take effect on April 1, 2025, with a minimum raise of 110 euros per month. A second increase of 2.8% is scheduled for May 1, 2026. The total duration of the collective agreement is proposed to be 27 months.
Sample projected salaries under the new agreement indicate significant changes for various pay grades. For example, employees in pay group EG 9b, level 4, could see their salaries rise to approximately 4,562 euros, while those in EG 12, level 5, may earn about 6,406 euros. Even entry-level positions in EG 5, level 1, could see salaries increase to around 3,038 euros. These adjustments are expected to benefit workers in citizen offices, construction yards, schools, youth welfare offices, social administrations, municipal IT services, public utilities, garbage collection, and rescue services.
In addition to salary increases, the arbitration recommendation includes several other provisions aimed at improving working conditions. Among these are an increase in the annual special payment from 2026, the option for employees (excluding those in hospitals and nursing facilities) to convert part of their special payment into up to three additional days off, and an additional vacation day starting in 2027. There is also a provision for a voluntary increase in weekly working hours to up to 42 hours, contingent on individual agreements. Furthermore, shift allowances are set to rise from July 1, 2025, with an additional 100 euros per month for regular shift work and 200 euros for alternating shift work.
The arbitration proposal aims to provide employees with more flexibility and choices between time off and financial compensation, a crucial factor in municipal administrations facing staffing shortages. The ongoing negotiations reflect the unions' demands for an 8% salary increase, with a minimum of 350 euros per month, contrasting with employers' current offer of 5.5% over an extended term, which the unions argue would significantly diminish the impact of the raise.
As the arbitration progresses, the unions emphasize the need for additional relief measures amid increasing workloads in public service departments. They are advocating for three extra days off for all employees, plus an additional day for union members, to address the chronic understaffing and high demands placed on current workers. The unions are also pushing for flexible models that would allow employees to choose between additional time off or extra pay, similar to schemes seen in other sectors.
The arbitration commission, led by former Hesse Minister President Roland Koch (CDU) and former Bremen State Councilor Hans-Henning Lühr, has until early April to finalize a proposal. Following this, the unions and employers will reconvene on April 5, 2025, to discuss the proposal and decide on its acceptance. If the recommendations are rejected, there is a possibility of indefinite strikes impacting public services, including administrative functions, waste collection, and daycare services.
With the current peace obligation in effect, public sector employees can expect no new strikes until at least next weekend. The settlement proposal presented on March 28 has initiated discussions between the federal government, municipalities, and the unions, with a focus on reaching a consensus that addresses the pressing needs of public sector workers.
As the negotiations unfold, the outcome will significantly impact the future of public sector employment, particularly for those working in local governments. The proposed changes are not only about salary adjustments but also about recognizing the essential contributions of public sector employees and improving their working conditions in a challenging environment.
In summary, the arbitration process represents a critical juncture for the public sector in Germany, with potential changes that could reshape the landscape for municipal employees across various sectors. The decisions made in the coming weeks will have lasting implications for the workforce, highlighting the ongoing struggles for fair compensation and working conditions in public service.
