Croatians stage first protest against austerity drive

ZAGREB (Reuters) - More than 5,000 demonstrators carrying anti-government banners marched through the Croatian capital on Thursday in the first major protest against the government's austerity drive.

"Croatia's citizens and workers are waking up and starting to fight for their future," Vilim Ribic, leader of the teachers' union, told the rally of mostly public sector employees in Zagreb's main square.

The Social Democrat-led government cancelled collective agreements in the public sector in mid-September, paving the way for cuts in employees' benefits as part of plans to reform state finances.

For more than 180,000 teachers, doctors, nurses and welfare workers, the decision ended many of their rights and perks dating back to when Croatia was part of Communist Yugoslavia.

"Resist intimidation and blackmail", "Did we cause the crisis?", "Profit is private, losses are everyone's", the banners read.

Croatia is due to join the European Union in July and wants to improve its finances to strengthen its credit rating, currently just one notch above speculative grade, as part of efforts to attract investment.

Prime Minister Zoran Milanovic told a cabinet session on Thursday that unions should realize that "the situation is difficult and I expect everyone to understand that".

"Big words and shouting will not end the crisis ... We have made some promises and I expect people to show some faith," he said.

Croatia has been in recession since 2009. The government hopes the economy will return to growth next year, thanks to major investments in energy and infrastructure.

However, it has also vowed to continue with fiscal consolidation and reduction of the oversized public sector.

(Reporting by Zoran Radosavljevic; Editing by Robert Woodward)