Berlin - The long-term unemployed can expect to benefit from Germany's new government of Christian Democrats (CDU) and Free Democrats (FDP), party leaders announced on Wednesday.

The decision came as German Chancellor Angela Merkel met with her future coalition partners to review progress in drawing up a legislative framework for the next four years.

Under the agreed proposals, the conditions for so-called Hartz-IV

welfare payments are to improve. The long-term unemployed also stand to gain more from accepting low-income jobs.

"We will remove fundamental injustices in the Hartz-IV system," said the CDU's general secretary Ronald Pofalla.

The top-level talks, ten days into the coalition building process, were led by Merkel of the Christian Democrats (CDU), Horst Seehofer of the CDU's Bavarian Christian Social (CSU) sister party, and the leader of the Free Democrats, Guido Westerwelle.

Each party brought eight further delegates to the negotiation table, to review the interim progress made by ten sub-committees covering all aspects of government policy.

Little tangible progress has been made so far, as the coalition talks have been hampered by the realization that state deficits stand in the way of carrying out tax cuts pledged by all three parties during the election campaign.

The FDP's general secretary Dirk Niebel said tax relief was still on the table. "I am sure we will negotiate tax cuts," Niebel said.

Ronald Pofalla, the secretary general of the CDU said the extent of tax cuts would be negotiated during a two-day coalition summit at the weekend.

Discussions are set to continue into next week, with the aim of forming the new government in time for anniversary celebrations 20 years after the fall of the Berlin Wall, on November 9.

Earlier in the day, Westerwelle said they would not be rushed into agreeing government pledges.

"It will last as long as it takes. It will take as long as necessary to reach a solution," the FDP leader said of the coalition- building process.

The government is expected to predict an economic slump of 4.5 per cent for 2009 when it releases its latest economic forecast on Friday.

This figure, a slight improvement on previous forecasts, would offer slightly more room for manoeuvre during tax negotiations over the weekend. Earlier in the year, the economy was predicted to shrink by 6 per cent. (dpa)