What are the unions demanding in the current talks?

Unions seek a 7% pay rise with a minimum €300 per month. They argue this protects purchasing power and helps retain staff across schools, police administration, and clinics. The claim targets lower pay groups through the floor amount, while the percentage supports middle bands in the state workforce.

What is in the TdL offer to state employees?

States’ employers have floated a package a little above 5% over 29 months, with initial zero months that delay costs. The structure likely includes staged increases and could feature one‑off elements, though details remain disputed. This approach backloads budget impact, easing near‑term cash outflows for Länder.

How could the settlement affect inflation and bonds?

A richer deal near 7% would lift payroll growth and can nudge inflation expectations, especially if €300 floors raise lower bands. That scenario may increase Länder bond issuance or shorten maturities. A leaner, staged outcome near 5% limits immediate pressure but extends uncertainty and keeps issuance plans sensitive to headlines.

What should investors watch over the next days?

Focus on final statements, any mediator move, and changes to zero months. Look for signals on one‑off payments, staging, and effective dates. Track state bond auction calendars, supplementary budgets, and service disruption updates in hubs like Potsdam to gauge spread moves, liquidity, and project timing risks.

Law and Government

Germany Public‑Sector Pay Talks, February 12: 7% Demand vs 5% Offer

ByHuzaifa Zahoor February 12, 2026February 12, 2026

German states public sector w talks are at a decisive stage. On 12 February, unions seek a 7% pay rise with a minimum €300 per month, while the states’ employers (TdL) float a little above 5% spread over 29 months, starting with several zero months. The gap keeps pressure on services as warning strikes grow. For investors, the outcome matters for Länder payrolls, inflation expectations, and near-term funding needs, including potential increases in state bond supply and spreads versus Bunds. We track headline risks and timing for a possible compromise.