German Public-Sector Wage Talks Fail and Will Go to Arbitration

(Bloomberg) -- A third round of wage talks for 2.5 million German public-sector workers ended without agreement overnight and will go to independent arbitration, raising the prospect of more transport disruption in Europe’s biggest economy.

Most Read from Bloomberg

The Verdi services union — which this week staged a nationwide strike that affected rail and air travel — wants a 10.5% pay increase for federal and municipal workers. The government offered around 8% plus a tax-free, one-time payment of €3,000 ($3,250) to compensate for high inflation, according to Interior Minister Nancy Faeser, who said authorities cannot afford more due to the tight budget situation.

“The signal from employees, especially those with lower and medium incomes, is clear: we need real compensation for inflation,” Verdi Chairman Frank Werneke said in an emailed statement after three days of negotiations in Potsdam. He ruled out a fourth round of talks.

Germany’s air and rail services ground to a halt Monday during the one-day strike as workers joined peers in France and the UK to fight for higher pay. The walkout also affected some ports, with Verdi and the EVG transport and railway union joining forces.

Faeser, a member of Chancellor Olaf Scholz’s Social Democratic Party, said public-sector employers had made significant concessions and that the offer on the table would bring “tangible relief in times of crisis” to workers.

“On behalf of the federal government, I can say that we are ready to talk at any time,” she said in an emailed statement. “I expect the unions to move quickly in the upcoming negotiations and to reach a good agreement in the end — that’s the only way to live up to our responsibility to employees.”

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.