Large-scale industrial action has come a step closer in Germany, with the country's service-sector union Verdi flatly rejecting an offer by Deutsche Telekom to grant its mobile phone division employees a 3.5-percent pay rise over the next 18 months.

Verdi Federal Board member Lothar Schröder called the offer "dishonorable" and "an imposition". The union itself had been calling for a pay hike of no less than 6.5 percent.

Schröder said in a statement on Tuesday that Deutsche Telekom's offer did not meet the requirements for a socially balanced deal. "Employees are requested to be content with very little, while management dishes out three billion euros ($3.96 billion) in dividends to shareholders this year," Schröder complained.

Irreconcilable positions?

Telekom negotiator Dietmar Welslau for his part insisted that his company's offer was fair and took into consideration the interests of both employees and the firm as a whole. He added that it also left some financial leeway for the company's innovation drive in a hotly contested market. "We need to have the courage to chart new territory to remain competitive," Welslau demanded.

Tuesday's round of bargaining was accompanied by a number of token strikes and a massive protest rally in the western city of Düsseldorf where thousands took to the streets to voice their dissatisfaction over management policies.

Verdi's bargaining committee will come together on May 3 to debate the further course of action. One day before that, there will be a fourth round of negotiations for the 18,500 employees working for Deutsche Telecom's T-Systems division.

hg/mll (Reuters, dpa)