German labor unions and government reach pay increase deal after countrywide strikes

The deal came after more than 150,000 public sector workers went on strike across Germany. The European Central Bank has been closely watching the negotiations as it considers the future of its massive stimulus program.

German unions and public sector employers agreed in the early hours of Wednesday to raise wages for about 2.3 million workers by 7.5 percent over two and a half years.

The agreement will retroactively increase wages by 3.19 percent beginning March 1. Another increase of 3.09 percent will kick in on April 1, 2019, followed by a final raise of 1.06 percent on March 1, 2020.

Read more: Strikes in Germany continue as Verdi union leader warns of 'real trouble' ahead

Low-paid workers will also receive a one-time payment of €250 ($309), and public sector pay scales will be changed to make them more transparent.

The deal came after three days of talks and a series of countrywide "warning" strikes last week that caused hundreds of flight cancellations and disruptions to public services.

Read more: Germany: Flights canceled as public sector strikes begin

German public sector strikes spark chaos

Hundreds of cancellations

German airline Lufthansa said it had to cancel more than half of its 1,600 scheduled flights on Tuesday as a result of the strike. Its budget subsidiary, Eurowings, was also affected.

German public sector strikes spark chaos

Travel plans disrupted

An estimated 90,000 travelers are affected by the disruptions at several major airports, including Frankfurt and Munich. Passengers traveling within Germany were told they could exchange their flight for a train ticket, or change their flight time free of charge.

German public sector strikes spark chaos

Grounded

Tuesday's walkout affects ground traffic personnel, customer support and some airport fire services across Germany. But the broader dispute over public sector pay also involves kindergartens, rubbish collection, utility companies and local transport.

German public sector strikes spark chaos

Prepare to wait

A notice board warns passengers at Frankfurt airport — Germany's largest hub — to contact their airline for more information.

German public sector strikes spark chaos

Pay dispute

Germany's Verdi labor union is demanding a 6 percent pay increase for the 2.3 million public sector workers it represents. It says wages have suffered, with airports in particular failing to pass on the profits from surging passenger numbers to staff. Here, union members block a bus depot in the western city of Essen

German public sector strikes spark chaos

Bumper to bumper

Disruptions to local buses and trains in Cologne also led to traffic chaos on the roads, with commuters facing long delays on their way to work.

'I'm satisfied'

Interior Minister Horst Seehofer, who represented public sector employers in the negotiations, said the agreement would make public service work more attractive, but not cost the government too much.

"I'm satisfied. The public finances will not be overstretched," he said, adding that the wage increases would cost the federal government around €2.2 billion a year.

Municipal authorities, who were also part of the negotiations, would fork out an additional €7.5 billion, according to the Association of Local Government Employers.

Read more: Lufthansa to cancel over 800 flights amid mass public sector walkouts

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01:37 mins.
Business | 10.04.2018

Strikes in Germany

'Best result'

The services union Verdi, which had coordinated walkouts of more than 150,000 workers last week with the German Civil Service Federation (dbb), was pleased with the deal. "It is the best result in many years," Verdi chief Frank Bsirske said.

Both unions had gone into the final round of talks demanding that the federal and communal governments agree to increase wages by 6 percent or, at a minimum, by €200 ($250).

The Interior Ministry said it would introduce a law to expand the deal to cover civil servants, judges and soldiers.

The European Central Bank has been closely watching the negotiations. Any broad uptick in German wages could lift inflation in all Euro currency economies, which could weigh on the ECB as it considers whether to wind down a massive stimulus program.

Read more: Eurozone central bank inches toward stimulus exit

amp/aw (Reuters, dpa, AFP)

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