Top Portugal union warns govt on minimum wage deal

* Higher wages hamper efforts to boost competitiveness

* Austerity, competitiveness part of anti-crisis drive

* Unions already wary of labour reform plan

By Andrei Khalip

LISBON, Dec 6 (Reuters) - Portugal's largest union said on Monday it would resist government plans to rescind agreement on raising the monthly minimum wage on Jan 1. as part of Lisbon's austerity measures to tackle a debt crisis.

The government is trying to convince investors the country will not follow Greece and Ireland in requesting an international bailout and has started a painful austerity drive while it also seeks to improve Portugal's competitiveness. [ID:nLDE6B40EJ]

A minimum wage increase would make the country's businesses even less competitive, particularly after this year's rise of 5.6 percent, which was the highest in the European Union.

The 750,000-strong CGTP umbrella union, which last month organised the biggest general strike in decades, said the minority Socialist administration "is doing everything to flee from fulfilling the agreement" it signed in 2006.

The deal envisaged annual 25-euro increases in the country's minimum wage to 500 euros in 2011.

Prime Minister Jose Socrates said last week the economic projections made in 2006 had changed and the remaining minimum wage hike had to be renegotiated with unions and companies.

"This is an inadmissible attitude that favours businesses at the cost of growing exploitation of those who have the least," CGTP said in the statement.

"It is time to struggle to demand that the agreement is fulfilled," the union said, calling on workers and unions to "dynamise their action at the company and regional levels".

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Most of nearly 500,000 people estimated to earn the minimum wage of 475 euros are in the private sector. But some are contractors in the public sector. This means the government's austerity drive, including a 5 percent average wage cut for civil servants next year, could be dented.

The Portuguese Industry Confederation has proposed an increase in the mimimum wage to no more than 483 euros, or by 1.7 percent -- in line with projected inflation.

Portugal is widely seen as the next euro zone "domino" at risk of a bailout. It approved a tough 2011 budget last month and promised more structural reforms to soothe investor concerns about its public finances. [ID:nLDE6B4OBR]

On Nov. 24, the CGTP and the second-largest union UGT staged what they said was the country's largest general strike, with 3 million workers taking part. They stopped trains and buses, grounded planes and disrupted various services.

UGT has said it was counting out further mass action for now, but it was paying close attention to labour reform proposals. [ID:nLDE6AT269] The UGT is traditionally close to the ruling center-left Socialists, while the CGTP is more left-wing.

The government has said it wants to discuss with unions and companies plans to reform the labour market in order to increase competitiveness after calls from institutions like the International Monetary Fund to make firing and hiring workers easier and less expensive.

Portugal's labour code gives substantial guarantees to workers, meaning it is costly for companies to fire workers during bad times. (Editing by Ralph Boulton)