The German government, local authorities and trade unions reached a deal late Saturday on higher pay scales for the country’s 2.5 million public-sector workers, staving off the possibility of indefinite strikes.

“We have accommodated the unions as far as we can responsibly do under difficult budgetary circumstances,” said Nancy Faeser, the country’s interior minister. Trade union Ver.di had called for significant raises as the country, like many others across the Continent, grapples with high inflation.

Among other things, the deal entails tax-free one-time payments totalling €3,000 in several stages, with the first €1,240 to be handed out in June, followed by €220 each month from July to February 2024. In March 2024, monthly pay for all public workers will increase by €200, followed by a 5.5 percent salary increase, with a minimum increase of €340.

The agreement runs for 24 months.

The compromise is largely based on a proposal by arbitrators who were called in after talks broke down last month. Ver.di had initially asked for a 10.5 percent raise and at least €500 more pay over a twelve-month period.

Frank Werneke, the union’s chair, said the negotiations had not been easy. “With our decision to make this compromise, we went to our pain threshold,” he said.

Municipalities in the country fear the deal may pose new financial challenges for them. Prior to the negotiations, Karin Welge, president of the Federation of Municipal Employers’ Associations, had estimated the deal could create additional costs of €17 billion for cities and municipalities.

The agreement sets an end to months of negotiations. In a string of walkouts, employee representatives in recent months had disrupted public administration and other public services. At the end of last month, Ver.di, together with the national rail and transport union, brought rail and air traffic to a halt across the country in a large-scale strike.