German govt, unions agree crucial pay deal

The threat of a damaging national strike paralyzing Germany's economy lifted on Sunday as the nation's government and labor unions representing more than 2.5 million public-sector workers agreed a new pay deal.

The agreement, which ends a lengthy dispute that had been rumbling toward an all-out strike, calls for public-sector employees — so-called government workers — to each receive a one-off payment of 3,000 euros ($3,300) and for their pay to be hiked by an initial 200 euros a month, backdated to March. Workers' pay will then be raised by 5.5 percent annually both this year and next.

The main union representing the public-sector workers, Vereinte Dienstleistungsgewerkschaft, or ver.di, had been seeking an immediate 10.5 percent increase in pay.

Germany's Interior Minister Nancy Faeser said the deal was based on the recommendations of arbiters called in during March, when talks between the government and the trade unions were at an impasse.

"We accommodated the unions as far as we could responsibly do in a difficult budget situation," the Associated Press news agency, or AP, quoted her as saying after the deal was announced early on Sunday.

AP quoted Frank Werneke, ver.di's chairman, as saying: "We went to our pain threshold with the decision to make this compromise."

Werneke said the deal will be equivalent to around 11 percent by the end of next year for most public-sector workers.

The union had sought a pay rise that keeps up with Germany's high rate of inflation, which was running at 7.4 percent in March.

High rates of inflation have triggered demands for large pay rises in other European nations, including France and the United Kingdom, where public-sector strikes have caused widespread disruption in recent months and where inflation has been running at much higher rates than in Germany.

Germany's ver.di union pushed its pay-rise campaign by staging frequent targeted walkouts that impacted hospitals and other government services. And, last month, the union teamed up with the EVG trade union that represents rail workers, to stage a one-day strike that brought the nation rail network to a standstill.

EVG, which is still in dispute with the government and which is seeking a 12-percent pay rise for workers it represents, organized another walkout on Friday.

It has said it is not interested in the deal ver.di accepted and will return to the negotiating table on Tuesday for more talks seeking a higher percentage rise.

And ver.di remains in dispute with Germany's airport security companies in its push for improved pay and working conditions for security workers. The union has called for a walkout of security staff at Berlin Airport on Monday that the airport has said will result in the cancellation of all departures.