After days of warning strikes that saw slowdowns in hospitals and closed daycares across Germany, unions and state employers agreed to pay raises for public sector employees on Saturday night.

The DBB and Verdi trade unions secured the deal after days of negotiations in the city of Potsdam with the Tarifgemeinschaft der Länder (TdL), the German state employers' umbrella organization.

What's included in the agreement:

State employees will see an 8 percent pay raise that will be implemented in three phases over the next 33 months.

By the end of 2021, state employees should be making at least €240 ($273) more per month than they currently do.

The deal is due to impact an estimated 3.3 million people in Germany — 1 million state workers and 2.3 million civil servants and pensioners, according to DBB.

Extra money was secured for health care workers, who will receive an additional €120 per month.

Child care workers at daycares and teachers will also get up to €105 extra per month on top of the raise.

Trainees, apprentices and interns will also receive a raise, amounting to €50 more per month.

The deal does not apply to the state of Hesse, which did not take part in negotiations.

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'Best result in years'

Verdi union boss Frank Bsirske hailed the agreement as a "success" for both unions and employers.

"This is the best result in many years and a good day for civil servants," said Frank Bsirske, the head of Verdi.

Verdi and DBB initially demanded a 6 percent pay raise within 12 months, with the guarantee of at least €200 more per month. The trade unions ended up getting more than what they asked for, albeit over a longer time period than they'd initially demanded.

Matthias Kollatz, the finance minister for the city state of Berlin, who also led the negotiations for TdL, described the result as "a good compromise."

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Why does the deal matter?

Saturday's agreement between the trade unions and state employers will impact police officers, emergency responders, hospital workers, teachers, the employees of certain state-owned theaters and museums, and even administrators at castles in Bavaria.

The agreement is also a step towards addressing several critical problem areas in Germany's labor market.

Germany's health care sector is suffering from major staff shortages, particularly among nurses and care workers for the elderly.

There are similar shortages at Germany's schools, daycares and kindergartens, with one teachers' association estimating that the country lacks nearly 40,000 teachers.

By increasing the amount of money for teachers and care workers, employers hope to also make the professions more attractive.

In a further attempt to draw workers to the public sector, the agreement reached on Saturday calls for an 11 percent raise for entry-level salaries.

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