(Releads with union head calling for strike end)
By Klaus Lauer
BERLIN, June 28 (Reuters) - The head of Germany's IG Metall trade union said on Saturday he would recommend calling off of a strike by engineering workers in the depressed former communist east that has hurt the country's key car industry.
IG Metall president Klaus Zwickel told journalists in Berlin he would recommend to the union's board on Monday that the strike, which has dragged on for almost a month, should end.
After bargaining through the night, negotiators failed to reach a deal and broke off talks early on Saturday morning.
Workers at car and steel plants in the former east have been on strike since early June, demanding for the 310,000 eastern engineering employees a reduction in the working week by three hours to the 35 hours standard for their western colleagues.
"The goal of introducing the 35-hour week in east Germany has not been achieved," Zwickel said.
Chancellor Gerhard Schroeder, who met Zwickel on Friday along with other trade union leaders, has urged a speedy resolution to the conflict in the interest of the German economy as a whole and that of the east in particular.
The stoppages have hurt Germany's car industry, which accounts for 10 percent of total industrial output and hundreds of thousands of jobs. They have also dented the image of the former east, still mired in economic stagnation 13 years after reunification despite huge cash transfers from the west.
NO COMPROMISE
After the talks collapsed on Saturday, IG Metall chief negotiator Hasso Duevel blamed the failure on the employers.
"We think the employers have missed a big chance," he said.
Employers said the union had lacked willingness to compromise. "We have set a positive signal," said Roland Fischer, negotiator for the employers.
Volkswagen AG said on Friday it had stopped production of its top-selling Golf model at its main Wolfsburg plant in western Germany for lack of parts from the east.
The strike also idled BMW AG plants in western Germany this week as parts from strike-hit eastern factories were not delivered, prompting fears the action could dampen already fragile growth in the entire German economy.
BMW has said the strike might make it reconsider the scale of an investment in the eastern city of Leipzig, where it is building a new factory which would create 5,500 jobs.
IG Metall is demanding a gradual cut in hours, which it says is justified by advances in eastern productivity.
The union said they had presented a compromise deal to employers, offering a range of weekly working hours between 35 and 40 hours to take account of companies' different situations on the path to the eventual introduction of a 35-hour week.
The employers also offered a band between 35 and 40 hours, and had proposed reducing working time by one hour until April 2005.
Economists warn that the former east, where the rate of unemployment at about 19 percent is more than double that in the west, risks driving investors further east to neighbouring Poland or the Czech Republic if it pushes up labour costs.