Public sector employers have reacted to trade union plans for possible strike action by threatening a lockout across 90% of the state sector and around half of the municipal sector. The unions had announced plans for targeted strike action involving around 10%-15% of the public sector workforce following a failure by the employers to make a decent pay offer. The negotiations cover 750000 workers in the state, regional and local government sector and the unions had been pushing for a modest real wage increase over the next three years. However, employers have not only failed to come up with anything like an acceptable offer but have also rejected union proposals for a special fund to tackle the gender pay gap. A mediation process is now underway.