The 2025 collective bargaining dispute in the public sector began like so many before it: with widely divergent positions, failed negotiations and increasing tension. Over 2.7 million federal and municipal employees were affected. Pressure mounted, not only on the streets but also at the negotiating table. When the third round of negotiations failed to produce a result, the employers’ side called for arbitration. What followed was a remarkable demonstration of the power that a professionally organized conciliation procedure can have.
A look behind the scenes
Unlike public negotiations or strikes accompanied by the media, arbitration proceedings deliberately take place in secret. The arbitration committee, chaired by Roland Koch (CDU) and Henning Lühr (SPD), met in private. A room in which objectivity, confidentiality and a solution-oriented approach took priority. Within a week, the commission presented a recommendation for agreement. It was not legally binding, but was so balanced in terms of content that both sides took the proposals it contained seriously in their final negotiations.
From maximum demands to a viable compromise
The initial situation was conflict-laden: ver.di and the dbb demanded an eight percent wage increase, but at least 350 euros per month. The employer side considered this demand to be unaffordable and ultimately offered an increase of 5.5 percent. The arbitration recommendation finally proposed a two-stage increase of 5.8 percent in total – three percent from April 2025, at least 110 euros per month, and a further 2.8 percent from May 2026. In addition, bonuses were to increase, the 13th month’s salary was to be topped up and an extra day’s vacation was to be granted from 2027.
More than a compromise on numbers
The agreement was not just a compromise in euros and cents. It also meant progress in working time models and flexibilization. For example, the possibility was created to work up to 42 hours per week on a voluntary basis. In addition, employees were able to convert part of their annual bonus payment into days off. These new elements provide answers to structural challenges in the public sector, from staff recruitment to a better work-life balance.
The silent power of conciliation
While previous collective bargaining rounds often involved months or even years of dispute, this process showed how efficient arbitration can be. Under the protection of the peace obligation, which prohibits strikes during arbitration, it was possible to hold constructive talks and prevent the conflict from escalating. The big advantage: the public was not burdened by further bus, refuse collection or administration downtime, and the employees could hope for a fair solution without having to accept further wage losses due to strikes.
A model with a future?
The 2025 public service agreement is an example of a functioning conflict resolution in times of social stress. Roland Koch put it in a nutshell: both sides had made considerable concessions in order to avoid industrial action and had done so successfully. His co-arbitrator, Henning Lühr, also emphasized the added value of the flexibility achieved and the sovereign scope for action, which should make the public sector more modern and attractive.
Dialog instead of pressure
At a time when social tensions and economic uncertainty are growing, the willingness to engage in constructive dialog is more important than ever. Arbitration in the public sector has proven that even deadlocked fronts can be overcome through methodical, trust-based mediation. For companies and public institutions alike, this case sends a clear message: those who rely on understanding are not only investing in short-term stability, but also in sustainable future viability. Mediation and arbitration are not a sign of weakness, they are an expression of strategic strength and, as this example shows, with success.
