PARIS (Reuters) - French employers will reject moves to overhaul rigid labor rules unless unions drop demands for heavier welfare charges on short-term job contracts, their leader said on Monday, suggesting talks this week could fail. Talks between the Medef employers' union and main labor groups spilled over to January after the last round broke up on December 21 without a deal, with each side accusing the other of making unacceptable demands. The government says it will impose its own deal if the two sides fail agree. But legislating without support from unions and employers could expose it to criticism. Unions may influence left-wing parliamentarians to water down the agreement. The government is pushing for a deal to address concerns that France has a two-speed labor market, with those on long-term job contracts enjoying too much job security and those on short-term contracts too little. It has also granted French companies 20 billion euros in tax credits to offset high social security charges for labor, which is often cited by economists as a brake on growth and an important factor in maintaining chronically high unemployment. Unit labor costs in Germany crept up 2 percent 1999-2010, while in France they leapt by more than 20 percent, OECD figures show. Productivity gains were pumped back into wage increases to fuel domestic demand. French unemployment is at a 13-year high while across the Rhine joblessness is at 6.9 percent, below the euro zone average. Parisot said that heavier levies on short-term contracts, which are mainly used in tourism and restaurants, would make employers less - not more - likely to hire, while undermining broader efforts to ease wage pressures. "It would be absolutely disastrous...to fail because of this purely symbolic issue," she said. Parisot, accusing Hollande's Socialist government of indirectly interfering in the talks to employers' disadvantage, added that they would not extend negotiations beyond this week. Two major unions reject measures to add flexibility. All five unions at the talks want greater job security for workers on flimsy contracts, calling for employers who use them to be penalized by paying higher taxes or more welfare contributions. Unions reject greater flexibility in work contracts and demand more security for short-term workers. They want employers using short-term contracts to pay more tax or higher contributions to the a fund that pays out unemployment benefits. "At the moment we have to be pessimistic," Stephane Lardy, negotiator for the hardline Force Ouvriere (FO) union, told Reuters. It's obvious that the last draft the employers offered us is very, very far from an agreement. Additional reporting Vicky Buffery and Emmanuel Jarry; Editing by Jon Boyle