Germany's public sector workers have agreed on a large wage deal with their state government employers to help offset the increased cost of living, the ver.di union said on Saturday.

Some 1.1 million workers will see their salaries hiked by more than 11% by the time the collective bargaining deal ends in October 2025.

The deal, struck by the ver.di and dbb trade unions, will give workers €3,000 ($3,200) tax-free bonuses and raises of at least 5.5%.

The two unions had initially demanded larger raises of at least 10.5%.

The affected employees include staff at universities, university hospitals, state-run prisons and administrative offices, among many others.

An additional 2 million civil servants not directly covered by collective bargaining will also benefit as their wages are usually adjusted to reflect agreements with the unions.

'Challenging' but 'feasible' deal

According to Hamburg Finance Senator Andreas Dressel, who served as the lead negotiator in the talks, state governments will need to find an extra €23.9 billion ($25.8 billion) over the next three years.

The agreement is a "challenging result overall" but financially feasible, Dressel said.

ver.di chief Frank Werneke said in a statement that the wage agreement, "could only be reached because tens of thousands of employees put pressure on employers with strikes across the entire public service sector of the federal states," 

"It was this pressure that made the agreement possible in the first place," he added.

The leader of the dbb labor group, Ulrich Silberbach, said he was pleased that workers won't have to go on protracted strikes to win a fair deal.

Inflation surged post COVD

Like most countries, Germany experienced decades-high inflation last year in the double digits, and price rises have continued into 2023.

The cost of living crisis was spurred by supply chain issues that unfolded in the wake of the COVID-19 pandemic and was exacerbated by Russia's invasion of Ukraine, which spiked energy prices.

In a bid to keep up with inflation, German unions called some of the country's most disruptive strikes in decades.

Walkouts and demonstrations were organized at universities and other state institutions in recent weeks.

In April, unions struck a similar deal between public sector workers employed by Germany's federal and local municipal governments.

Last month, Germany's train drivers' union warned of fresh strikes after the breakdown of talks over pay and conditions.

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mm/lo (dpa, Reuters)