The collective bargaining agreement for public service employees in Germany has been reached, but it has left many feeling more anxious than satisfied. On April 7, 2025, it was announced that over 2.5 million employees of federal and municipal governments will see a salary increase of 5.8 percent, but the details reveal a mixed picture.
Frank Werneke, chairman of the Verdi union, described the outcome as a "difficult result in difficult times." This sentiment reflects the challenges faced by both employees and employers during the negotiations. While the agreement may seem beneficial at first glance, a closer look reveals that the increases will be implemented in two stages: the first part, a 3 percent increase, will take effect in April 2025, and the second part, a 2.8 percent increase, will follow in May 2026.
When broken down, the initial increase translates to an annual raise of only 2.25 percent, which barely exceeds the current inflation rate. This is significantly lower than the 8 percent increase that Verdi had initially demanded for 2025. The prospect of increasing weekly working hours to 42 hours, while framed as voluntary, has also raised concerns among employees, who fear that this could lead to pressure to work longer hours.
Municipalities are bracing for the financial impact of this agreement, with estimates suggesting that the additional costs could exceed 10 billion euros annually. Given the already precarious financial situation of many local governments, this burden could have serious implications for public services and infrastructure. Cities like Magdeburg are already preparing for significant budgetary adjustments, with a projected need for an additional 4.3 million euros in the current year alone.
In contrast, reactions from different regions have varied. In Saxony, local leaders have voiced strong criticism, arguing that the agreement does not adequately consider the financial strain on municipalities. Ralf Hänsel, president of the Saxon Municipal Employers' Association, stated that the deal would exacerbate the financial difficulties faced by local governments, which are already grappling with record deficits.
On the other hand, some officials in Thuringia have praised the agreement as a reasonable compromise that aligns with the economic realities faced by municipalities. Knut Kreuch, the mayor of Gotha, emphasized that the deal strikes a balance that allows local governments to retain and motivate their employees.
The new collective agreement also includes provisions for increased allowances for shift work and a rise in the 13th month's salary, further enhancing the compensation package for public service employees. Employees will also gain the option to convert parts of their 13th month's salary into additional days off, although this flexibility will not apply to all sectors, particularly municipal hospitals.
Despite the challenges that lie ahead, the federal government has committed to covering approximately 1.94 billion euros of the additional costs over the duration of the agreement. However, this figure does not account for the potential financial implications of extending the agreement to civil servants, which could significantly increase the overall burden on public finances.
As the negotiations concluded, there was a palpable sense of relief that a strike was averted, with both sides agreeing to the terms laid out by mediators. However, the concern remains that these financial commitments may lead to cuts in services or increased fees for citizens, as local governments struggle to balance their budgets.
In summary, while the collective bargaining agreement represents a step forward for public service employees in Germany, it also highlights the ongoing financial struggles faced by municipalities. The delicate balance between providing fair compensation for workers and maintaining the fiscal health of local governments will continue to be a contentious issue in the months and years to come.
