German unions, employers weigh deal on public sector wage hikes
By Thorsten Severin
POTSDAM, Germany (Reuters) - Negotiators for Germany's public sector unions and employers on Tuesday reached a breakthrough in marathon pay talks, but final approval was delayed amid concerns raised by some local employers, sources involved in the negotiations told Reuters.
The proposed agreement would give over two million German public sector workers pay raises in three steps over 30 months, a source familiar with the deal and German media said.
The deal, which must still be approved by the unions and the employers association, would give workers a 3.19 percent raise backdated to March 1, followed by a 3.09 percent increase from April 1, 2019, and a further 1.06 percent from March 1, 2020, according to the source and the media reports.
The Verdi trade union and the dbb association of civil servants had sought a pay rise of six percent for one year, or at least 200 euros more a month.
Negotiators for the unions and employers struck the preliminary deal during a third round of talks in the town of Potsdam near Berlin on Tuesday, following warning strikes by more than 150,000 union members last week.
Verdi leader Frank Bsirske interrupted a meeting with his union's authorising committee late on Tuesday to meet with the members of the VKA Association of Local Government Employers, the sources said.
The deal would cover 2.3 million public sector workers, but the unions hope to extend it to another 344,000 civil servants, judges and soldiers.
Employers had balked at the unions' pay rise demand, but agreed that public sector workers should benefit from strong growth in Europe's largest economy.
Buoyant tax revenues, a record budget surplus, falling unemployment and low borrowing costs have fuelled a consumer upswing in Germany.
In the industrial sector, 3.9 million workers agreed on a pay and flexible working hours deal in February that amounted to a roughly 4 percent annual rise for 2018 and 2019. Inflation edged up to 1.5 percent in March.
The European Central Bank is keeping a close eye on German wage negotiations for any sign that wage growth is picking up, potentially lifting inflation and giving the ECB added leeway to start winding down its massive stimulus programme.
Last week, hundreds of flights were cancelled as tens of thousands of ground staff and other public sector workers staged walkouts, which also hit nurseries and rubbish collection in German cities.
(Writing by Madeline Chambers and Andrea Shalal, Editing by Gareth Jones and William Maclean)
