If workers vote for strike action then strikes could begin before the end of next month.
The union represents over 300 drivers and supervisors at Metrolink.
Unite regional officer Dave Roberts said: “Unite has had no option but to ballot its members for strike action after Metrolink refused to make an acceptable pay offer despite six months of talks.
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“Our members have gone beyond the call of duty to continue to operate throughout the pandemic and to be offered a derisory pay offer, a deep pay cut in real terms, is deplorable.
“If workers vote for strike action then Greater Manchester will effectively grind to a halt, affecting both commuters and those hoping to attend sport and leisure events.
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“Our workers are reluctantly balloting for industrial action as a last resort, but Metrolink could still avoid strike action occurring by returning to negotiations and tabling a realistic pay offer.”
Transport for Greater Manchester has been contacted for a comment.