General Workers' Union general secretary Tony Zarb is optimistic of a breakthrough in discussions over the shipyards, he tells The Sunday Times in an interview today.

The government and GWU are holding talks through a mediator on the privatisation of the 'yards in a bid to reach a breakthrough in talks over retirement schemes and job security for the workers.

Mr Zarb said that during the past week, the union and government inched closer to agreement. "Before we know it, we could strike a deal," he said.

While the government wants to downsize the workforce to about 700, the union is calling for guaranteed employment for those workers who do not opt for an early retirement package.

The government has ruled out the union's demand but has offered to fine-tune the early retirement schemes.

A spokesman for the Finance Ministry yesterday said that close to 300 shipyard workers had so far applied for the early retirement schemes.

Despite the half-page adverts taken out in the GWU daily l-oriżżont warning workers that they have been deceived by the government, Mr Zarb insists that the GWU is not putting pressure on workers to refuse these schemes.

Finance Minister Tonio Fenech has made it clear that the government is willing to make up for the cash difference if the schemes are eventually amended.

He insists that had the dockyard concentrated on ship repair, which he says earned it €21 million in the last two years alone, it would have no longer required subsidies. In agreement with the European Commission, the government's subsidies to the shipyards have to go by the end of this year.