German Union Lays Into Coalition Over Delayed Pay Reform for Public Servants

Germany's delayed Federal Civil Service Pay Act draws union condemnation as salaries fall below welfare levels, while states raise pay and municipalities cut costs.

A long-awaited law meant to bring federal civil servant salaries in line with constitutional requirements has stalled, drawing sharp condemnation from the country’s main public-sector union. The dbb beamtenbund und tarifunion issued a blistering statement on 11 July 2026, accusing the government of disregarding rulings from Germany’s highest court.

A draft bill for the Federal Civil Service and Pension Adequacy Act (BAlimentG) has been circulating among ministries since April, yet the cabinet failed to approve it before the summer recess. According to dbb chairman Volker Geyer, this inaction means the government continues to ignore binding decisions from the Federal Constitutional Court. In the lowest pay grades, current remuneration already falls below the level of basic state welfare benefits. Geyer called the delay “a fatal signal” to every state employee.

The blockage comes as the ruling coalition grapples with a strained federal budget. In a government statement on 9 July, Chancellor Friedrich Merz outlined a vision of a “serving state,” promising sweeping reductions in reporting obligations and the introduction of a deemed-approval rule after four months for administrative permits.

The government also plans to cut taxes for low- and middle-income earners starting in 2027, worth roughly €10 billion a year. To help finance this, a “wealth tax” would rise to 45 percent on incomes above €250,000 and to 47 percent above €280,000. Finance Minister Lars Klingbeil set the net new borrowing in the 2027 draft budget at €118.7 billion.

In a separate move aimed at showing fiscal restraint, the Bundestag unanimously voted on 10 July to suspend its own scheduled pay rise for this year.

While the federal reform languishes, several states have moved ahead. Hesse raised civil servant pay by 3.02 percent on 1 July. Bavaria, Baden-Württemberg, North Rhine-Westphalia and Berlin have published preliminary salary tables; Bavaria’s adjustment takes effect on 1 October.

Local authorities, by contrast, are tightening their belts. Cologne announced it would scrap performance bonuses for about 4,800 civil servants from 2027, aiming to achieve savings in the millions already this year. The city’s staff council slammed the move as a “devastating sign” for the public sector’s attractiveness. Germany’s Taxpayers’ Association, however, praised the cost-cutting, pointing to swelling municipal deficits.

The unresolved Federal pay question also casts a shadow over preparations for the 2027 collective bargaining round (TVöD). With municipal finances under strain, employers are expected to use the budget squeeze as a key argument against large wage increases. A new State and Local Government Relief Act, passed on 10 July, commits the federal government to providing €1 billion annually from 2026 to 2029. Analysts doubt that sum leaves room for substantial salary hikes.

Further uncertainty arises from plans to make labour law more flexible. The coalition’s steering committee agreed to temporarily extend fixed-term employment without cause to a maximum of 48 months. Unions and staff representatives are also watching closely proposals to end telephone sick notes and require a doctor’s certificate from the first day of illness, set to take effect in 2027.