German pay talks continue under threat of strike

German public sector pay arbitration talks continued yesterday with the threat of Germany's first major strike in the sector in a decade still hanging over Europe's largest economy.

A spokesman for trades union Verdi, which negotiates on behalf of 2.8 million public sector workers, said it expected the arbitration talks to run all weekend and that mediators would not draw up a compromise until tomorrow night.

Verdi is seeking pay rise of at least three per cent while Germany's public sector employers, made up of central and local governments, say they cannot afford more than about one percent.

Wage negotiations collapsed just before Christmas, prompting the appointment of arbitrators who have until midnight tomorrow to come up with a compromise.

The Verdi spokesman said its wages committee would meet on Monday in Bremen to decide whether the compromise was a good enough basis for negotiations to restart or whether to ballot its members over strike action.

Strikes in Germany are exceptionally rare. If negotiations fail to restart next week Germany could face its first all-out public sector strike since 1992, a walkout that idled public transport nationwide, left trash uncollected and caused widespread disruption to the economy.

A German official representing public sector employers at the talks said on Thursday there had been some movement towards reaching a settlement but there was no confirmation of that from participants yesterday.

Horst Metz, finance minister in Saxony state, said in brief remarks to reporters that both sides were "getting closer".

"That is to say it is not only the employer side that is nearing the employees but that also the unions are accepting things on our side," Metz said.