Shop workers and the trade union Verdi have agreed to a 2.7 per cent wage increase for 65,000 retail workers in Hamburg.

The wage increase is slightly above that agreed for the banking and insurance industries several weeks ago.

And it is likely to become a model for other German retail negotiating districts according to industry experts.

Lower-paid employees will receive a higher wage hike under the deal and there are some extras such as a new pension scheme and higher holiday pay.

Despite a worse economic outlook and situation than last year, this year's wage agreement is higher than the increase of just over two per cent last year.