BERLIN - German public sector employers and unions representing around 2.5 million workers entered a truce phase on Thursday after talks failed to resolve a wage dispute, days after the country's biggest strikes in decades.

A third round of negotiations lasting three days ended late on Wednesday without result, the Verdi and dbb unions said.

"Despite clear movement, the employers were not prepared to make sufficient concessions to the employees on the minimum amount," said Verdi chief Frank Werneke.

The Interior Ministry announced on Twitter in the early hours of Thursday that the talks would enter arbitration, bringing an independent mediator to the table.

During this arbitration process, workers may not strike.

"We went a long way towards accommodating the unions," said Interior Minister Nancy Faeser, the government's chief negotiator. "But the unions were not ready for an agreement."

The arbitration process shows that the German system of collective bargaining is working and that both partners are interested in finding an solution, VP Bank chief analyst Thomas Gitzel said.

"This is not to say that further strikes will not take place, but employees will not immediately resort to strike action again. It should be clear that employers will have to dig deep into their pockets," he said.

On Monday, railways and airports across Germany ground to a near halt in what Verdi called the largest walkout since 1992 in Europe's biggest economy, as soaring inflation stokes wage demands.

Public sector employers have offered an 8% pay raise, or a minimum of 300 euros ($325) per month, Faeser said.

"In addition, we would have been prepared to make tax-free one-off payments totalling 3,000 euros - to compensate for high inflation," she said.

Verdi and dbb have demanded a 10.5% raise or at least 500 euros more per month under a collective bargaining agreement with a term of 12 months.

  - Reuters