Today, following the fourth round of intensive negotiations and a conciliation procedure, employers and trade unions came to a collective agreement for the federal and local public service. The agreement includes a linear pay increase of 5.8 per cent in two stages and further improvements for working hours and special payments. The collective agreement is valid for 27 months, from 1 January 2025 until at least 31 March 2027.

Federal Minister of the Interior Nancy Faeser led the negotiations on behalf of the Federal Government, and the Local Authorities Employers’ Association (VKA) negotiated for the local authorities. The results of the 2025 negotiations will directly benefit around 132,000 federal public employees and over 2.6 million public employees of local authorities represented by the VKA.

Federal Minister Faeser said: “We have reached a collective agreement which offers fair compensation in difficult times. This is good news for a strong and future-proof public service. There will be tangible improvements and relief for our employees. We are making the public service more flexible, more modern and more attractive. Salaries will increase by a total of 5.8 per cent in two stages. We are introducing a voluntary time-over-money model for extra days’ leave, and we are doubling the shift work allowance and increasing the annual bonus. We are also ending the remaining differences between eastern and western Germany with regard to job security and temporary contracts.

“This collective agreement is a sign of respect to the hard work of public service staff, many of whom have difficult and challenging jobs. This must be reflected in salaries and good working conditions. Having said that, we never lost sight of the strained budget situation. We went to the limit of what we can responsibly offer in a difficult budget situation.”

Results of the collective agreement:

Pay increase as of 1 April 2025:

• Employees will receive a linear pay increase of 3 per cent – with a minimum of 110 euros – from 1 April 2025, and a further pay increase of 2.8 percent from 1 May 2026.
• Trainees will receive a pay increase of 75 euros from 1 April 2025 and another increase of 75 euros from 1 May 2026.

Allowances for shift work and alternating shifts doubled:

• As of 1 July 2025, the monthly allowances for shift work will increase from 40 euros to 100 euros, and for alternating shifts from 105 euros to 200 euros.

Increase of annual bonus (13th month’s salary):

• The annual bonus will increase from 2026: For federal employees in pay groups 1 to 8, the annual bonus will increase from 90 per cent to 95 per cent of the monthly salary, for employees in pay groups 9a to 12 from 80 per cent to 90 per cent and for employees in pay groups 13 to 15 from 60 per cent to 75 per cent. 
• For employees of local authorities, the annual bonus will amount to 85 per cent of the monthly salary across all pay groups.

Voluntary time-over-money model:

• From 2026, employees will have the option to exchange a proportion of their annual bonus for up to three extra days’ leave. Special conditions apply for local hospitals.

Further amendments: 

• From 2027, employees will receive an additional day of leave.
• From 2026, employees will have the option to increase their working hours up to a maximum of 42 hours a week in agreement with their employer.
• The rules on long-term working time accounts and flexitime will be made clearer.
• At the federal level, inequalities between eastern and western Germany will be ended with regard to job security and temporary contracts.
• A new rule will be introduced which will provide trainees and students with permanent contracts after completing practical training with an employer as part of their studies.

The 27-month collective agreement will cost around 1.94 billion euros for the salaried public employees of the Federal Government alone.

The future Federal Government will decide whether the arrangements of the collective agreement will be carried over to federal civil servants.