MNI BRIEF: German Net Public Pay To Fall Over 2 Years - IWH

Collectively-negotiated German public sector workers’ earnings will fall by 0.4% this year and by 0.1% in 2026 once inflation and increased social security payments are taken into account, the Leibniz Institute for Economic Research Halle (IWH) reported on Tuesday.

Federal and local public sector workers last week agreed pay rises of EUR110 per month for the lowest earners, or 3% of salary, as of April this year, with a collective increase of 2.8% from May 2026, plus better annual bonuses, in a deal set to last 27 months.

However, sharp increases in social security contributions and statutory health insurance, plus an assumed interest rate in the region of 2.3% this year and next, mean real net earnings will decline over the course of the agreement, having already fallen slightly in 2024, IWH said.