More than 11,000 workers from the insolvent German drug store chain Schlecker were preparing for final dismissal notices after regional negotiations broke down Thursday for a loan to help them find new work.
Talks collapsed between three German states that would have guaranteed a 70-million-euro ($93-million) loan to fund a special jobs-creation agency for the employees, most of them women.
The Free Democratic Party, a minority partner in the ruling centre-right coalition, opposed the loan, saying Germany's strong employment figures meant the workers should be able to find work, even though many are low skilled and elderly.
Schlecker announced in January it would file for bankruptcy and presented a rescue plan to close more than half of its 5,400 German stores and to axe 11,000 of 30,000 positions.
The stores stock a wide variety of goods, from baby food to shampoo to washing-up liquid, but do not carry medicine. Some observers have said the store has an outdated image and unions have criticised worker conditions.