Huge strikes during the last few weeks had underlined the demands by public workers' union Verdi for an eight percent raise – but they accepted a lower rate.
Head of Verdi Frank Bsirske and Lower Saxony state Finance Minister Hartmut Möllring confirmed on Sunday that they had reached an agreement for three percent wage increase to be followed by another 1.2 percent increase in a year's time, resulting in an overall increase of five percent.
Verdi members must now approve the deal, but speaking after the meeting in Potsdam, Brandenburg, Bsirske said he was confident of getting a majority vote for the agreement.
Meanwhile, employees at Volkswagen are also to see a salary increase of 1.7 percent, it was announced on Sunday. This will be accompanied by a one-off payment of 3.5 percent of their wages between now and July.
The deal is the second part of an agreement from last year, which was hammered out with industrial union IG Metall.
But at the same time all 16,500 subcontracted workers at the auto giant will lose their jobs by the end of the year.
“For those affected it is not good. But there is no way around it,” VW head Martin Winterkorn told Der Spiegel.
He said full time employees were safe for the time being. “For this year I don't see any problems.” But he added, “If it later doesn't work, one will have to consider other things.”