Employer and union groups failed to agree on collective pay raises for 2006 yesterday and planned to meet again next week in an effort to chip away at the divide between their demands. That gap has closed somewhat recently. The Federation of Greek Industries (SEV) yesterday upped its original offer of a 2.8 percent pay raise to 3.8 percent, which will cover expenses related to Greek inflation, SEV said. Meanwhile, the General Confederation of Greek Labor (GSEE) has lowered its pay hike demand by half a point to 7.5 percent, to be deliverable in two parts. GSEE is Greece’s largest umbrella union. «Our offer protects the purchasing power of workers,» said SEV President Odysseas Kyriakopoulos after the meeting. Inflation this year is estimated to be around 3.2 percent. The industrialists came under fire recently after SEV officials described the initial offer of a 2.8 percent pay raise as generous. Despite the incremental progress on closing the gap between the two groups, Kyriakopoulos said it will be tough to come up with a solution to the wage negotiations. GSEE President Christos Polyzogopoulos, also seemingly pessimistic about the fate of the wage talks, reminded employers that a general strike could be around the corner. «We are a step before an intense clash,» he said. «We are living a period in which [wage] proposals ridicule workers.» The government refused again yesterday to intervene in the talks, saying the matter had to be settled between employers and employees. «The government does not intervene in negotiations between social groups,» said government spokesman Theodoros Roussopoulos. Some voters have blamed the conservative government for silently heeding the proposed low pay raises from SEV. Industrialists and union leaders are scheduled to meet again next Thursday. Later that day, GSEE is scheduled to call a meeting to decide whether it will accept what employers have proposed or hold a strike.