A last-minute wage agreement between the Austrian government and public sector unions has averted a major protest planned for central Vienna on Tuesday afternoon.

The deal, which covers a two-year period, was reached just before the rally, expected to attract up to 30,000 people, was set to take place. Several buses from other regions were already en route to Vienna when the cancellation was announced.

Under the terms of the agreement, wages will remain  3.5% below inflation for this year. However, next year, an additional 0.3% will be added to help offset rising living costs. The leader of the Austrian Public Service Union (GÖD), Eckehard Quin, called it a “fair agreement” given the difficult circumstances.

The wage deal is structured in a socially tiered way, with increases ranging from a minimum of €82.40 to a maximum of €437.80. For 2025, another 0.3% will be added to the inflation rate from October 2024 to September 2025.

The negotiations were particularly challenging due to the country’s bleak budget situation and ongoing recession, with a recent change in the Ministry of Finance adding further complexity. Quin noted that a similar two-year agreement had been reached during last year’s metalworkers’ negotiations, highlighting the need to consider the economic constraints. “We had to consider the economic framework and the budgetary difficulties,” he said. “Nevertheless, the purchasing power of public sector employees has been secured.”

Christian Meidlinger, leader of the municipal workers’ union younion, also welcomed the deal, calling it a “very good agreement.” He stressed that the initial position had involved calls for a zero-wage round. “This solution also contributes to the stability of the budget,” Meidlinger added.

Vice Chancellor and Public Service Minister Werner Kogler expressed relief over the deal, acknowledging the tough negotiations. In a statement, he said, “It is often forgotten that the public sector competes with the private sector, and therefore it must remain an attractive employer.” Finance Minister Gunter Mayr also praised the agreement, emphasising that it ensures “social fairness and relief for public service employees.”

For the deal to come into effect, it still requires confirmation by parliament, which is expected to take place in December.