To compensate for the increase in inflation in recent months, employees first receive a tax-free amount of 3,000 euros. This will be paid in installments from June. From March 2024, the salary will increase by another 200 gross euros per month, followed by a salary increase of 5.5 percent. Members of employers’ associations and trade unions have yet to accept the new collective bargaining agreement.
As a result of the deal, for example, a cleaner working in the public sector will earn more than 13% more in the future, German Interior Minister Nancy Faeser points out. Verdi union leader Frank Werneke speaks of ‘the biggest pay rise in public sector post-war history’.
Price tag
But such an arrangement comes at a price. The total costs for the federal government amount to almost 5 billion euros. “We accommodated the unions as much as we could still justify this in a difficult budgetary situation,” said Faeser.
But even local governments have to dig deep into their pockets, they expect a multiple of these costs. The president of the federation of municipal employers’ organizations Karin Welge speaks of “the most expensive collective agreement ever”. German cities and towns are short on cash, and Welge says employers have gone “to financial breaking point” with the compromise. But the package as a whole is something to be proud of, she says.