December 14, 2016 / 4:42 PM / 7 months ago

German unions seek 6 pct wage hike for 2 million state workers

2 Min Read

BERLIN (Reuters) - German unions said on Wednesday they would seek a wage increase of 6 percent for more than 2 million civil servants and other public sector employees.

Vibrant domestic demand has replaced exports as the main growth driver in Europe's largest economy, and a hefty pay hike at a time of rising state revenues could help keep growth in private consumption on track as a tick-up in inflation slowly eats into Germans' spending power.

"Compared to the wage development in the private sector, employees in the public sector are still lagging behind," said Verdi head Frank Bsirske.

Verdi, Germany's biggest white collar union, is leading the wage negotiations on behalf of itself and four other unions.

The 6 percent hike, covering staff employed by Germany's 16 regional administrations, would apply for 12 months, Bsirske said.

Negotiations for the some 1 million staff in hospitals, schools and kindergartens will start on Jan. 18, and any deal is likely to be extended to 1.1 million regional-level civil servants, their DBB union said.

At federal and municipal level, more than 2 million public sector workers sealed a two-stage wage increase of 4.75 percent covering 2016 and 2017.

In negotiating that deal, unions initially demanded a pay hike of 6 percent for 12 months while employers had offered 3 percent over two years. [nL5N17W7VN]

Overall real wages - adjusted for inflation - rose by 2.5 percent in 2015. That was the biggest increase since 1992, pushing up household spending.

For 2016, the Federal Statistics Office expects nominal wages for 19 million private sector workers with collective agreements to have risen around 2 percent, which would be the smallest increase since 2011. [nL8N1DU2N0]

The government expects household and state spending to propel overall growth of 1.8 percent this year, the strongest GDP expansion in five years. For 2017, Berlin predicts a slowdown to 1.4 percent due to weaker exports and fewer working days.

Reporting by Michael Nienaber, editing by John Stonestreet

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