Citing Italy’s deputy prime minister Gianfranco Fini, Reuters reported that talks between Fiat and its unions collapsed on Thursday after the labour leaders refused to accept a government-brokered plan aimed at limiting job cuts.

Fiat immediately announced it would on Monday begin the temporary layoffs of 5,600 workers, Reuters said.

According to Reuters, a Fiat statement said that 1,000 workers would be laid off at Fiat Auto and 350 people at robotics unit Comau and components manufacturer Magneti Marelli – all in Turin.

Another 1,800 from the same three groups would be laid off at at the Termini Imerese plant on the island of Sicily and further 2,450 workers would be sent home from other plants around Italy, Reuters added, citing the Fiat statement.

Reuters said the Italian government presented both sides with a compromise proposal that would have sacrificed some 2,400 Fiat jobs in return for securing the future of thousands of other workers threatened with redundancy but union chiefs said the deal was too tough to agree to.

According to Reuters, Fini said: "We recognise that it is impossible for the parties to reach an agreement. Only the [union] CGIL's hardline is preventing a good deal."

Reuters noted that Fiat has maintained it would press ahead with about 8,000 temporary layoffs with or without a union deal and said the lay-offs are expected to begin on Monday, likely provoking prolonged strike action that could spread across Italian industry.

Reuters said the Italian government tried to avoid the industrial strife by telling Fiat on Thursday that it would fund about 2,400 permanent job cuts if the company agreed to soften other aspects of its make or break restructuring programme.

Fiat had originally sought just 500 permanent job cuts, but unionists believe many of the temporary layoffs will become full-time redundancies and lead to the closure of the company's sole car plant on the impoverished island of Sicily, Reuters added.

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