UPDATE 2-Kuwait customs workers strike over pay

Tue Mar 13, 2012 4:54pm EDT

By Sylvia Westall

KUWAIT, March 13 (Reuters) - Customs workers in Kuwait went on strike on Tuesday over wages, but an Oil Ministry official said there were no signs of serious disruptions at the Gulf state's ports.

Customs employees last waged a strike in October, disrupting oil shipments from the OPEC member state. It was not immediately clear how many workers participated in Tuesday's strike. In October, some 3,000 workers took part in the two-day walkout.

"Today's action is small. It is not causing a big problem, but we will have to see what happens tomorrow," said an official in Kuwait's oil ministry, who declined to be named.

The country is producing around 3 million barrels of oil a day, according to the state oil company KPC.

The strike did not appear to have caused any notable problems at Kuwait's international airport or border crossings, consultancy Control Risks said in a note. It said there could be possible demonstrations linked to the strikes.

Last year's strike halted vessel traffic in and out of Kuwaiti ports, including at least five oil tankers. Workers from Kuwait Airways also went on strike last year.

On Monday Kuwait's government, under pressure from labour unions, announced a 25 percent pay increase to state workers while at the same time ordering measures to head off inflation in the prices of basic goods.

The wage hike follows a series of strikes last year that put pressure on state companies to increase pay packets, as well as a snap election last month that saw the Islamist-led opposition take control of parliament.

The ministry has "instructed trade controllers to handle decisively any attempt to raise the prices of basic commodities", commerce ministry undersecretary Abdelaziz Al-Khaldi told state news agency KUNA. He did not elaborate on how prices would be controlled.

The upward pressure on wages in Kuwait, partly due to increased union activity since last year's Arab Spring social unrest in the region, has become a major issue for economic policymakers. The finance minister said last year that public sector wages had risen to about 85 percent of the country's oil revenues, which he called "a real danger".

Last month Kuwait's central bank governor Sheikh Salem Abdul-Aziz al-Sabah resigned after 25 years in the post, complaining about the rapid rise in government spending.

However, state finances appear able to cope with the latest public sector wage hike, at least for now, thanks to high global oil prices, the government posted a budget surplus of $47 billion in the first nine months of 2011, nearly double the surplus in 2010. Analysts expect economic growth to stay comfortable this year at around 3.5 percent.

And although the average inflation rate climbed to a three-year high of 4.8 percent in 2011, it remains far below levels hit in 2008, when it soared above 10 percent. Consumer prices rose 3.5 percent from a year earlier in January this year.

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