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Thu 30 Apr 2015 12:27 PM

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Tunisia agrees public sector wage hike after union talks

Move is despite pressure from international lenders to reduce public spending and cut the budget deficit

Tunisia agrees public sector wage hike after union talks

Tunisia's government has agreed to increase the wages of 800,000 public sector workers after negotiations with the main labour union, a government official and a union source said on Wednesday.

Tunisia is under pressure from international lenders to reduce public spending and cut the deficit to help economic growth. The union source said the deal for a 50 Tunisian dinar a month ($26) increase was expected to be signed on Thursday.

The increase will add about 540 million dinars ($280 million) more public spending to the budget.

It increases the minimum wage in the public sector by 15.6 percent to 370 dinars, the second such hike in less than two years in the North African state.

Tunisia has been praised as an example of compromise politics and democratic transition since overthrowing autocrat Zine El-Abidine Ben Ali in a 2011 uprising, holding free elections and drafting a new constitution.

But many Tunisians still worry about the rising cost of living, unemployment and the continued marginalisation of rural towns, some of the factors that helped fuel the 2011 uprising.

The government expects the budget deficit to narrow to 5 percent of gross domestic product in 2015 from 5.8 percent last year.

But it faces pressure from creditors to cut high public spending, including subsidies on basic foods and fuel.

An Islamist militant attack on the national museum in Tunis last month, which killed 21 foreign tourists, also risks hitting the tourism sector, a main source of revenue in a country with little of the major oil and gas resources of its neighbours.

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