Overview

• Employers concluded redaction talks and will disburse the 3.0% wage increase retroactive to April 2025 to about 2.5 million public-sector employees with one of the next payrolls.
• The tariff agreement also locks in a further 2.8% raise from May 2026, an increased annual special payment from 2026 convertible into up to three extra days off, and one additional vacation day from 2027.
• Municipalities recorded a €25 billion financing deficit last year, project more than €30 billion in shortfalls for 2025 and face an estimated €216 billion backlog in local investment.
• Local officials warn that higher personnel costs will force prioritization of mandatory tasks, cuts to voluntary services such as pools and adult education, and increased reliance on short-term treasury loans.
• The federal coalition’s proposed special fund of over €500 billion, including €100 billion earmarked for states and municipalities under a future “Zukunftspakt,” still lacks detailed timing and distribution plans.