German public sector unions, employers agree pay hike

German unions on Wednesday said they had clinched a deal with employers giving public sector workers a "significant" salary boost, following a wave of strikes that hit airports, train stations, hospitals and daycares. The 2.3 million people working for state and local governments will see their wages increase in three stages between now and 2020, in an agreement Verdi union boss Frank Bsirske hailed as "the best result in many years". The deal, announced early Wednesday after talks that ran late into the night, will immediately give workers a 3.2-percent salary hike backdated to March 1. A 3.1-percent increase will follow from April 2019, and another 1.1-percent from March 2020. The lowest-earning workers, such as refuse collectors, will get an additional one-time payment of 250 euros ($310). Interior Minister Horst Seehofer, who represented federal employers in the negotiations, told reporters he was "very pleased" with the outcome. The agreement will cost the state an additional 2.2 billion euros, and municipal employers some 7.5 billion, he said. "Our employees are worth it," Seehofer added. The Verdi, GEW and DBB unions had gone into the talks demanding a six-percent salary boost over one year or at least an additional 200 euros per month, arguing that public sector workers should share in Germany's booming economy and record government budget surplus. After employers rejected their original demands as too costly, the unions raised the stakes with a series of hours-long "warning strikes" that saw some 150,000 people walk off the job last week. - Hard-won pay hike - The strike action caused travel chaos for hundreds of thousands of commuters as bus, tram and train services were disrupted. Air travel was snarled too as security workers, firefighters and support staff walked off the job. Germany's flagship carrier Lufthansa alone was forced to cancel 800 flights. Kindergartens, rubbish collection services and hospitals were also affected. Bsirske said the hard-won pay hike meant a "significant boost" for low and medium earners. "This will make the public sector more attractive," he said. The deal come after the influential IG Metall metalworkers' union earlier this year secured a 4.3-percent wage hike as well as the right to more flexible working hours for nearly four million workers. The salary negotiations in Europe's biggest economy are being closely watched by the European Central Bank, which sees higher wages as key to pushing up stubbornly low inflation in the 19-nation single currency zone.