German Employers Start Arbitration, Halting Strike

What’s going on:  

In response to a stalemate in negotiations with unions over pay, German public sector employers have initiated arbitration proceedings, temporarily halting strikes that had disrupted the transport sector. 

On Monday, the biggest economy in Europe was virtually halted, as Verdi and dbb unions launched their biggest strike action in over three decades, paving the way for a third round of negotiations. 

After intense negotiations, with unions seeking a 10.5% pay raise for 2.5 million workers, the talks concluded without an agreement late Wednesday leading public sector employers to declare they would now begin arbitration proceedings. 

Why it matters:  

Employers had hoped that a 3,000-euro tax-exempt bonus to balance out inflationary pressures would be an extra benefit to their existing 8% salary hike. 

“We went a long way towards accommodating the unions. But the unions were not ready for an agreement. We must initiate arbitration,” said Interior Minister Nancy Faeser, the government’s chief negotiator. 

How it’ll impact the future:  

Unions are legally required to suspend any planned strike action for the coming weeks as a commission of representatives from both sides and independent observers sets out to deliver a solution, which is predicted to be delivered in the latter half of April. 

If unions and employers don’t come to a consensus with the commission’s assistance, the threat of additional strikes looms.