BERLIN, Dec 21: A German mediator appointed to resolve a wage dispute between almost three million public sector workers and employers said on Saturday he saw little hope a deal could be reached to avert a major strike set for January.

Mediator Hans Koschnick told Inforadio he saw no scope for a settlement because of the seemingly intransigent positions of the Verdi union, demanding at least three percent more pay, and employers, who offered a one percent rise.

If the side declares ‘I don’t have anything more, that’s the end of the line’, then that side is not interested in mediation, Koschnick said, referring to public sector employers who say they cannot afford any further pay rise.

On the other hand it is equally as difficult if the union sticks to its demands without showing any flexibility, the former Bremen mayor added. If there is no movement on that side, it makes me wonder: what’s the point?

After an all-night bargaining session ended in failure on Thursday, the Verdi union which represents public sector workers and representatives of government employers turned to formal arbitration to try to resolve their dispute.

If arbitration fails, Germany faces a strike by nurses, bus drivers and firefighters that could tip Europe’s biggest economy into recession and further hit Chancellor Gerhard Schroeder’s slumping popularity before key state elections in February.

Koschnick was appointed by the Verdi union. The employers nominated another former mayor, Hinrich Lehmann-Grube, from the eastern city of Leipzig, as co-mediator.

Verdi, Germany’s biggest union, gave the country a taste of what could lie in store with brief stoppages this week that led to transport delays and hundreds of cancelled flights. On Wednesday alone, 110,000 workers staged temporary strikes.

Germany’s last all-out public sector strike in 1992 hit the economy hard when patchy transport services, uncollected rubbish, and undelivered post caused chaos in a country renowned for reliable rail and bus networks and clean cities. The impact was felt across Europe.

Roland Koch, state premier of Hesse, reiterated the public sector employers would not cave in to union demands.

We don’t have any money available for pay rises, Koch told the Bild am Sonntag newspaper. And we can’t ask for more money from the taxpayers to finance a pay increase. The unions are not going to force us to our knees with a strike.

Verdi has said the arbitration process should be complete by January 9, and has warned the union would be ready for a long strike if the last-ditch efforts for a deal failed. German union law forbids strike action during arbitration.

Previous German public sector disputes have been resolved by arbitration, but mediators did not hold out much hope this time.

Verdi rejected a government offer of a 0.9 per cent pay rise on January 1, followed by a 1.2 per cent increase on October 1, combined with a half-hour increase in weekly working hours to 39 hours in western Germany.

The current talks are for 2.8 million public sector workers, represented by Verdi and smaller unions, such as the police union. Any deal they reach is usually applied subsequently to the country’s 1.7 million civil servants. —Reuters