Published by Global Banking & Finance Review®
Posted on October 8, 2025
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleAustria renegotiates civil servants' pay, saving €310M to address budget deficit and high inflation. The government aims to cut inflation to 2% next year.
VIENNA (Reuters) -Austria's government has renegotiated civil servants' annual pay rise, saving 310 million euros ($361 million) next year, it said on Wednesday, as it tries to tackle a budget deficit over the EU limit and the highest inflation in western Europe.
The three-party coalition government in office since March took the highly unusual step of reopening a pay deal that had already been agreed upon by threatening trade unions with a pay freeze the following years if they did not agree. The country is set to barely avoid a third year of recession this year.
The government argued that budget constraints made the move necessary. Austria has a tradition of collective wage negotiations by sector in which workers generally receive pay increases roughly in line with inflation and strikes are rare.
"The Austrian model that has made us rich over decades works - the model of consensus, of balancing interests. I think this is a good agreement," Finance Minister Markus Marterbauer told reporters.
Austrian inflation is around 4%, twice the average in the euro zone.
Chancellor Christian Stocker issued a statement reiterating his aim of cutting inflation to 2% next year and said the deal "will contribute to breaking the wage-price spiral and reaching that inflation target".
($1 = 0.8596 euros)
(Reporting by Francois MurphyEditing by Alexandra Hudson)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
A pay rise is an increase in an employee's salary or wages, often reflecting their performance, inflation adjustments, or changes in the cost of living.
Collective wage negotiation is a process where employers and a group of employees, often represented by unions, discuss and agree on wages and working conditions.
Explore more articles in the Headlines category
