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EDITIONS
 Monday, 6 January, 2003, 11:05 GMT
German public sector strike looms
An attendant stands in an empty tube of the Old Elbtunnel in Hamburg, northern Germany
Union officials were ready to step back from a strike
German regional government employers have refused to endorse a compromise pay deal, bringing the prospect of the first nationwide public sector strike in more than a decade a step closer.

Four days of talks between ended in stalemate in the small hours of Monday morning.

Government appointed mediator Heinrich Lehmann-Grube said the employers had viewed the proposal to pay Germany's three million public sector workers a 3% pay rise spread over 18 months as "a burden".

The public sector union Verdi had found the pay offer "largely acceptable," said Mr Lehmann-Grube.

Transport, schools and hospitals

"There is still hope here, but that requires the two sides to move significantly from their positions," Mr Lehmann Grube said. Further talks will take place on Wednesday.

Selective strikes by public sector workers last month disrupted air travel and public transport, leading to the cancellation of hundreds of flights from Frankfurt airport and long traffic jams.

Nurses, teachers and refuse collection workers also stopped work.

A nationwide strike - the first since 1992 - is likely to start in January if agreement cannot be reached.

Last effort?

"There is a small hope that there could still be compromise," said Heinrich Aller, who is finance minister for the state of Lower Saxony and heads the employers' negotiating team.

He said the main problem was how the proposed settlement could be funded, given that German states and municipalities are all facing tight budgets and hoped the unions would make concessions.

Verdi rejected a pay offer at talks shortly before Christmas, when the employers improved on their original offer.

The union has campaigned for a pay rise of at least 3%, and for greater equality in pay between workers in the former communist eastern Germany and the richer west.

Chancellor Gerhard Schroeder faces growing discontent over his government's handling of the economy.

Neither business leaders nor workers have welcomed his attempts to bolster a sagging economy with tax rises and public spending cuts.

Chancellor Schroeder's government is also trying to rein in spending to keep its budget deficit within a 3% shortfall demanded by the European Union's Growth and Stability Pact.

Interior Minister Otto Schily has warned that meeting the 3% pay demand would cost bn euros (3.8bn; $6.2bn), which the country can ill afford.

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  Wolfgang Munchau, Financial Times Deutschland
"There is lots of small print that makes the two sides [government and unions] wide apart"
See also:

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