ifo President Fuest Favors Moderate and Nuanced Civil Service Wage Increases in Germany
The ifo President Clemens Fuest has spoken out in favor of “moderate wage increases” in the German public sector. “There are stronger arguments for a moderate wage round than for a big increase,” he said in Munich on Monday. “The adjustment should be nuanced. In areas where the civil service has difficulty in attracting qualified staff, it makes sense to have more scope for better pay.”
According to Fuest, wage moderation is necessary, especially in view of how the coronavirus is weighing on public finances. “The economy is faltering and tax revenues are collapsing,” he explained, adding that from 2009 to 2018, collective earnings in the public sector had risen by around 24 percent in nominal terms. The average across the entire economy was 25 percent, so the civil service is not far behind. At the same time, public sector employees benefited greatly from their job security in the current crisis. This, too, is an argument for restraint in wage increases, which must also be financed by those taxpayers who are worried about their jobs.
ifo Viewpoint 219: Collective Bargaining in the Public Sector
On October 22 and 23, collective bargaining in the public sector will enter its third and possibly decisive round. The trade union ver.di is demanding 4.8 percent more pay, or at least EUR 150, for federal and municipal employees. While collective wage settlements apply only to salaried employees in the first instance, they are usually also adopted for civil servants. What should we make of this demand – and what is an appropriate wage settlement in the current situation?
