German states and trade union representatives said they had struck a pay deal for about 700,000 civil servants Sunday, averting potentially crippling strikes.
The accord foresees a 5.8-percent wage increase for employees of 14 of Germany's 16 states, phased in between now and the end of 2010, unions representing the public sector and the TdL state employers' association said.
The agreement came out of the fourth round of pay talks aimed at ironing out pay inequality among staff in road maintenance offices, statistics bureaus, clinics, police stations and other public institutions.
The contract covers 22 months. Retroactively for January and February, staff will receive a bonus of 20 euros (25 dollars). From March 1, staff will receive a 40-euro pay-out across the board as well as a three-percent salary hike.
From March 1, 2010, pay will rise another 1.2 percent. The deal came after demonstrations Friday involving some 40,000 civil servants agitating for a better offer from the states, which had originally proposed a 4.2-percent pay rise to be phased in by the end of 2010. In November a strike by 3.6 million metal and electronics sector workers that had threatened to deal a blow to Germany's ailing economy was narrowly averted after unions and employees agreed to a 4.2-percent wage increase.
Germany's powerful unions have been criticised for seeking large wage increases at a time when Europe's largest economy is in recession and firms are struggling to stay afloat in the face of weak demand and scarce credit. The unions argue that decisive wage hikes would put cash in people's pockets and boost consumer spending.