Blue collar no more

German bin men are solidly middle class

Photo by vvills_ on Unsplash

Dear Reader,

In mid-March, during the final, bitingly cold week of winter, Berlin was submerged in a sea of rubbish. Bins overflowed in backyards, bags were piled up on top of and next to containers on the street. The parks had turned into one large fly-tipping zone. Bags of stinking nappies, half-eaten döner kebabs—it was a rodent’s paradise.

The two and a half million Germans employed by local councils were demanding higher pay — and they quite literally dropped a stink bomb in their war for better wages. The decision for bin men to spearhead the walkout left its mark: 12,000 tonnes of rubbish stewed in the streets of Berlin during the week-long strike.

Bin men - and public workers from cemetery wardens to nursery teachers -were demanding an eight percent pay rise (plus an extra three days’ holiday) and chose to strike for the second time this winter after local councils refused to meet their demands.

Curiously, though, there can’t have been many times in history when working on the bin lorries has been such a well-paid profession.

According to the most recent official figures from 2023, a waste disposal manager (a dustman to you and me) took home a median salary of €40,000. In fact, bin men now earn even more that than. In 2024, after public service union Verdi successfully negotiated an 11 percent pay increase, the median salary in this profession rose to over €44,000.

To put that number into context, it’s over double what a bin man was earning back in 2010 and not far off the current median wage for the entire workforce, which stands at €46,000.

Has there ever been a time and place in history when working on the dustcart has put you so solidly in the middle classes?

Nonetheless, dustmen remain at the lower end of the spectrum for public sector pay. Before the latest round of increases, the average salary for a nursery teacher was €45,000, while a typical primary school teacher earned €56,000.

An optimist might see these public sector salaries as the ultimate fulfilment of Germany’s post-war promise of Wohlstand für Alle! (wealth for all). A pessimist, however, is likely to see them as part of a trend of ballooning public sector costs that are weighing down private enterprise with ever higher taxes.

Indeed, there is another side to this story.

This week, the Federal Statistics Office released the annual accounts of Germany’s local governments — and they made for grim reading.

The deficit run by local governments quadrupled between 2023 and 2024, due in large part to that eleven percent wage agreement that Verdi negotiated for its members. The biggest cost driving that staggering rise in expenditure? Salaries, which jumped by nine percent to hit €90 billion.

Last year’s municipal deficit, at €25 billion, was a new record for post-reunification Germany and prompted local administrators to call for “immediate action” from the federal government to help them cope with their “catastrophic” financial situation.

These dire figures largely explain why local councils are so reluctant to meet the latest demands from public sector staff.

None of the options they have for financing these demands look good. They could raise taxes. But their main source of income, local business tax, is already milking a dry udder due to the listless state of the German economy. Trying to squeeze a few more drops out is a strategy with diminishing returns.

Instead, councils have been forced to cut spending on infrastructure and in areas like culture, which aren’t seen as critical to the survival of society.

Berlin’s controversial recent decision to cut €100 million in subsidies to its famous theatres and concert halls elicited international condemnation. What few people realise is that the German capital’s finances are in a dire state, party due to the fact that public wage bill rose by 50 percent over the previous decade, reaching €10 billion by 2020.

There is another consequence of these major public sector wage increases—especially for low-skilled workers. In a society where the state doesn’t dictate everyone’s pay, private sector employees are likely to react to ensure they don’t draw the short straw. Even economists generally sympathetic to industrial action have voiced this concern.

Marcel Fratzscher, one of Germany’s most prominent economists and a man known for his links to the SPD, has described the latest public sector wage demands as “totally utopian and irresponsible.”

“The outcome of these wage negotiations will set the tone for the entire economy,” Fratzscher told broadcaster ARD. “There is competition for skilled workers. If the public sector increases wages by eight percent, it will be difficult for private companies not to follow suit.”

The result, as economists never tire of reminding us, will be further inflation, which will trigger yet another round of wage disputes.

After three failed rounds of negotiations between Verdi and local government representatives, arbitrators were brought in to broker a compromise in late March. Their proposal is a pay rise in two stages: three percent this year and another three percent in 2026.

Now that Friedrich Merz has relaxed the rules around public debt, one suspects it will be easier for local governments to sign off on this deal. Given that the unions were also represented on the arbitration committee, it looks like Verdi will also agree to the compromise.

The two sides meet to discuss the proposal on Saturday.

God knows, Germany has bigger fish to fry these days. If our streets are strewn with rubbish again this month - and trade union handballing adds to the chaos that Donald Trump is already causing to Germany’s public finances - few will have much sympathy for the plight of the garbage man.