UPDATE 1-Euro zone's Slovenia hit by big strike over cuts

Wed Apr 18, 2012 9:56am EDT

Related Topics

* Govt plans 7.5 pct cut in public sector wages

* Plan to cut budget deficit to 3.5 pct in 2012

* Some 80,000 take part in strike

By Marja Novak

LJUBLJANA, April 18 (Reuters) - Slovenia was hit by its largest public sector strike in 20 years on Wednesday as some 80,000 teachers, doctors, police officers and others halted work over planned pay cuts to rein in the euro zone member's budget deficit.

The strike, due to last one day, closed schools, kindergartens, libraries and other public institutions in the latest sign of public unease across the 17-member euro zone over drastic spending cuts to tackle the sovereign debt crisis.

Facing renewed recession, the centre-right government of Prime Minister Janez Jansa plans to cut the budget deficit from 6.4 percent in 2011 to 3.5 percent this year, and public sector wages and benefits will bear the brunt of the belt-tightening.

Jansa, who took power in February, warned on Tuesday that the country's economy was "on the edge".

On Wednesday, trade unions rallied tens of thousands to strike in the largest such industrial action since the country declared independence from Yugoslavia in 1991.

Thousands protested at midday in the country's main cities, including the capital Ljubljana where some held banners that read, "You are saving the country but destroying the people", and "Let's save the social state for our children."

"We want more cooperation and less competition," Branimir Strukelj, the head of the confederation of public sector trade unions, told crowds in front of the government building.

"We don't want the kind of brutal capitalism that leaves behind corpses, the unemployed and the poor."

Parliament is due to begin debating the measures next week.

The country state was the euro zone's fastest growing economy in 2007 but was badly hit by the global crisis because of its dependence on exports.

The economy shrank by 8 percent in 2009. After a mild recovery in 2010, Slovenia re-entered recession in 2011 when gross domestic product (GDP) fell by 0.2 percent with a further fall of 0.9 percent expected in 2012 amid lower export demand and weak domestic spending.

Debt soared to 47.6 percent of gross domestic product (GDP) in 2011 from 21.9 percent in 2008 on lower tax income and high government spending.

RISING UNEMPLOYMENT

Jansa said his government would continue talks with the unions but that major changes to its plan to cut public sector wages by some 7.5 percent from July would not be possible.

"The Slovenian economy is on the edge," he told state TV Slovenia on Tuesday. "Twelve thousand companies went bust in this crisis, we cannot put an additional burden on the private sector," he said.

"The strike will not solve anything, it will just increase our problems."

Jansa said 120,000 jobs had been lost in the private sector over the past three years while the public sector had grown by 9,000 to some 160,000 in a country of 2 million people.

Unemployment soared to 12.4 percent in February from 7 percent at the end of 2008.

Strukelj, the union chief, said the unions might agree to pay cuts if the government backs down on plans to increase class sizes and working hours for teachers that would result in layoffs.

The strike, which does not involve transport workers, is planned for one day but unions say it could be extended.

"We are against the unjust action that is destroying the social sector, when they want to save money on the weakest groups in our state - school children, young families, the sick and retired," said teacher Jana Petek, protesting in Ljubljana.

Jansa said the government was planning to take on new debt of at least 1 billion euros ($1.3 billion) this year to cover the deficit, of which 700 million euros will be spent on interest on debt acquired in the past.

According to the government, public sector employees on average enjoy 10 days more vacation each year and an average monthly wage 23 percent higher in January than that in the private sector.

"I don't support this strike," said 35-year old Katja Miler, who lost her private sector job as a carer for the handicapped last year. "People in the public sector would not suffer too much if their wages were reduced a bit. They have enough privileges anyway," she said.

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