Someone is always unhappy, but most public servants should be happy now. 380 euros gross more for the bus driver, 430 more for the educator, 360 euros more for the garbage collector – the collective bargaining agreement in the public sector gives the 2.5 million employees significantly more money. Exactly how much depends on the respective salary, on average there will be about twelve percent more in the next two years.
The question is, however, what that means for the municipalities, which have to pay a large part of the money. The cities and counties are now faced with 17 billion euros in additional expenditure, predicts their chief negotiator Karin Welge, it is the “most expensive deal of all time”. The wages have to be paid out to chamberlains, mayors and district administrators, although their cash situation is very different. In the end, the taxpayers have to finance the wages, since the chamberlains cannot conjure up the money.
“If things continue like this, the lights will soon go out for us.”
In Germany, to put it simply, there is a north-south divide: while many municipalities in Bavaria, Baden-Württemberg and parts of Hesse are doing well because the economy is booming there and companies pay a lot of trade tax, many municipalities in North Rhine-Westphalia, for example, groan in Rhineland-Palatinate and Saarland under debt. Some people in the East are not doing well either. This raises the question of where these municipalities should get the money from. Whether they will increase garbage or library fees in the future and raise admission prices for museums and swimming pools. Or, that would also be conceivable, to close the swimming pool or the music school completely.
Ralf Hansel is one who can help in finding an answer. Hänsel is a CDU politician and district administrator in Meissen, Saxony. He represented Saxon employers in negotiations in the public sector. Hansel rejects the degree, he says: “If things continue like this, the lights will soon go out for us.” Even now, says Hänsel, his district spends 60,000 euros more every day than it takes in – because the federal government keeps burdening the municipalities with new tasks without funding them adequately; because the grants from the Free State of Saxony were simply not enough. As a result of the wage agreement, the district would have to pay 7.2 million euros more in personnel costs in the next two years, which were not provided for in the budget. And now? “We’ll try to sweat it out,” says Hansel.
He hopes, which is what he means, that there will still be a little leeway in the household. That social spending might be lower than expected; that there is still enough money to be found somewhere. On the other hand, Hänsel does not want to cut back on the music school or volunteer support, even if he has already thought about it aloud. And what if you don’t have enough money in the end? “Then we have to take out a cash advance,” says Hänsel, “it’s like a private household overdrafting its account.” He absolutely wants to prevent that because, as he says, he would then have no money left for investments in infrastructure, for example for road repairs. “That goes to the substance.”
Hansel isn’t the only one who fears this. “Many municipalities are overwhelmed with this degree,” says Martin Beznoska, an expert on financial policy at the Institute of German Economics in Cologne. He expects that many cities and counties will now increase fees, for example for waste disposal, and ticket prices for local transport. Beznoska also considers cuts in so-called voluntary spending to be conceivable, including swimming pools, libraries and music schools. They could limit their offer or even close it altogether. The problem for many indebted municipalities is that interest rates on loans are currently rising again. “It can get very dicey.”
Would an old debt cut be a possibility?
Marcel Fratzscher, President of the German Institute for Economic Research, emphasizes, however, that the degree in public service is not responsible for the precarious situation. “The financially weak municipalities have been doing very badly for over two decades,” says Fratzscher. Many groaned under high social spending and on the other hand had little opportunity to earn more money. “You can’t just keep increasing the trade tax because the companies will then move away.” From Fratzscher’s point of view, higher fees or swimming pool closures would also do little; the sums that would be released as a result are far too small.
In view of the high inflation, public sector employees have a legitimate interest in higher wages, says Fratzscher. “You shouldn’t deny them that just because politicians can’t manage to fund the municipalities properly.” The money is there in Germany, it just has to be distributed correctly. Fratzscher calls for an old debt cut for the affected municipalities and a reform of the state financial equalization.
Achim Truger from the University of Duisburg-Essen has a suggestion on how exactly this could work: The economist calls for cities and communities to generate more income and to help the poor in particular. This would be possible if the municipalities received a higher proportion of sales tax and less of the fluctuating trade tax. In addition, he wants to make the trade tax less dependent on the profits of individual companies, which is lacking in financially weak cities and creates large differences between the municipalities. With such a reform, liberal professions such as lawyers and doctors would also pay the tax.
District administrator Ralf Hänsel from Meißen would also welcome a reform and he has decided not to wait any longer. He is currently fighting with the Saxon state government for more money for the municipalities – and he doesn’t want to stop until something finally moves.