January 16, 2019 / 8:06 PM / a year ago

Tunisia PM says strike will be costly but can't raise wages further

TUNIS, Jan 16 (Reuters) - Tunisia’s prime minister said on Wednesday that the nationwide strike called by UGTT union will be very expensive but the government could not raise wages disproportionately to the state’s ability to afford it.

The country’s biggest union said on Tuesday it would call for a strike after talks with the government to reach a deal to raise the salaries of 670,000 public servants failed.

“We proposed an important raise in wages but it was rejected by UGTT, the nationwide strike will be very expensive but we can not give more than our financial capabilities,” Youssef Chahed said in speech.

He added that the increase asked for by UGTT would boost inflation and would lead to more borrowing or higher taxes.

Tunisia is under pressure from the International Monetary Fund to freeze public sector wages to help reduce the country’s budget deficit.

Tunisia’s state-owned airline Tunisair expects major disruptions to its flights schedule on Thursday due to the strike and urged customers to change bookings, it said.

The strike which will start at midnight would include all airports, trains, ports, schools, hospitals, state media and government offices.

Sources told Reuters that the government proposed to spend about $400 million on pay rises whereas UGTT asked about $850 million.

Tunisia’s economy has been in crisis since the toppling of autocrat Zine al-Abidine Ben Ali in 2011 threw it into turmoil, with unemployment and inflation shooting up.

The government aims to cut the public sector wage bill to 12.5 percent of gross domestic product (GDP) in 2020 from the current 15.5 percent, one of the world’s highest levels according to the IMF. (Reporting By Tarek Amara; Editing by Toby Chopra)

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