Millions of German industrial workers are set to get a 3.4 percent pay increase this year following a deal between employers and a major union.
Tuesday's agreement will see the raise take effect in April. Workers will each get a one-time payment of 150 euros ($170) for January-March.
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The raise falls short of the 5.5 percent IG Metall, Germany's biggest industrial union, originally demanded for some 3.7 million workers but contrasts with the country's annual inflation rate of minus 0.4 percent. The union has pointed to high corporate earnings and growth forecasts, arguing that domestic demand must be strengthened.
IG Metall represents workers in the automobile and machinery industries, among others. Tuesday's deal was negotiated in Baden-Wuerttemberg state, a key industrial region, but is expected to be extended nationwide.