After months of negotiations, a major pay dispute in Germany's public sector has been resolved.

Over 2.5 million workers will see a salary increase of 3% starting April this year, followed by another 2.8% in May next year.

The agreement also includes an extra vacation day starting in 2027 and the option to convert part of the 13th-month salary into additional days off.

Flexible work hours and higher shift allowances are also part of the deal.

While some concerns arose over voluntary extended work hours, unions ensured no one would be forced to work longer.

The new contract, effective retroactively from January 2025, will last 27 months, avoiding further strikes and disruptions.

Officials praised the deal as a balanced solution in challenging times.