There's the huge issue in Munich that the city cannot pay much more than has been agreed upon country-wide, it's all according to TVL. So in a city as expensive as Munich and with such a low unemployment rate, why would anyone start working for the city and not just choose a company? That's even more difficult for IT and other academic personnel.

Back in the days there was the saying that if you had a training/education that is useful in the private sector you 'd be either a moron or an hopeless idealist if you worked for the public sector - no matter if for the city, the Stadtwerke (utility company), firefighters, cops... only the cops and teachers get a "Münchenzuschlag" to compensate for higher cost of living. Then again it isn't nearly enough to fill the difference.

You're right.

But they also deliberately shrunk the staff levels a few years ago to save money.