Pay rise of 8.8% for German public sector workers

Public sector workers in Germany have received a substantial pay rise of 8.8%. They will receive a 3.2% increase this year, again in 2020, and a final increase of 2.4% in 2021. The deal was agreed by unions representing about one million German public sector workers and covers all of the nation’s regions except one, the state of Hessen.

The move comes in response to record-low unemployment. However, economist at ING bank Carsten Brzeski said: “The strong labor market is a perfect illustration of the current divide between the domestic and external side of the German economy.” The country’s exports, worth €1.5 trillion, are struggling from weak global demand and political uncertainty.

IZA World of Labor economists, Hilmar Schneider and Ulf Rinne, point out that: “The reduction of unemployment during the last decade is mostly driven by demographic factors in east Germany.” The authors also write, that issues such as Brexit and uncertainty over the stability of the EU are likely to have impacts on Germany’s economy, in their article The labor market in Germany, 2000—2016.

Therefore, with domestic growth at its lowest level in four years, it is hoped that the pay rises will boost consumer spending. The new deal will benefit nurses, teachers, and police officers. Frank Bsirske, chair of the ver.di trade union said: “This is the best result in many years and a good day for public service workers.”

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