February 8, 2018 / 1:30 PM / 17 days ago

Germany public sector unions to demand 6 percent pay hike

BERLIN (Reuters) - German unions said on Thursday they would demand a pay hike of 6 percent for more than 2 million civil servants and other public sector employees from the federal government and municipalities.

The public sector wage negotiations, expected to start later this month, follow a hard-fought deal on more pay and flexible working hours struck for 3.9 million employees in the industrial sector.

“There is enough money to pay employees more fairly and competitively,” said Ulrich Silberbach, head of the dbb union which represents civil servants, pointing to Germany’s strong economic upswing and record tax revenues.

Frank Bsirske, head of the Verdi trade union, said the pay hike demand of 6 percent or at least 200 euros more per month would apply over 12 months.

The pay negotiations are expected to end years of wage restraint in Europe’s largest economy, potentially aiding the European Central Bank as it tries to get euro zone inflation back up to its target rate of just below 2 percent.

The wage hikes are likely to further boost consumer spending at a time when vibrant domestic demand has replaced exports as the main driver of growth in Germany, with strong imports already pushing down the country’s large trade surplus.

Germany’s federal states last year agreed with trade unions a two-stage wage increase of 2.0 percent for 2017 and 2.35 percent from January 2018 - a result which fell well short of their initial demand of a yearly pay hike of 6 percent.

The deal for federal states compared with a two-stage increase of combined 4.75 percent in 2016 for public sector workers of the federal government and the municipalities.

Reporting by Michael Nienaber and Gernot Heller; Editing by Paul Carrel and Gareth Jones

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