* First major protest against austerity in Croatia
* Unions say more than 70,000 employees on strike
* Government cuts meant to reduce budget deficit
* Fitch downgrades outlook to negative
(Adds Fitch's outlook revision, paras 1, 9)
ZAGREB, Nov 29 Croatia's teachers and nurses
staged a one-day strike on Thursday, the first major protest
against austerity measures in the country that will join the
European Union next year, while Fitch affirmed Croatia's rating
but downgraded its outlook.
Unions said more than 70,000 out of some 100,000 people
working in schools, universities and hospitals joined the strike
over reduced bonuses and wage cuts announced for 2013.
The year-old centre-left government cancelled a collective
agreement with public sector unions earlier this year in an
effort to renegotiate contract terms and said it would cut 2.3
billion kuna ($393 million) from the wage bill next year.
The government is trying to consolidate the public finances
and revive the economy that is now in a fourth year of
The budget deficit will be reduced to 3.5 percent of gross
domestic product this year from 4.4 percent last year, but for
next year the deficit is seen rising to 3.8 percent due to the
costs of EU accession, higher loan repayment costs and
restructuring of the ailing shipbuilding industry.
Croatia is scheduled to join the EU in July.
Teachers have threatened new strikes towards the end of this
school year if the government does not reverse its plans for
Croatia's efforts to consolidate public finances have helped
it preserve its investment grade, which is just a notch above
However, the Fitch rating agency downgraded Croatia's
outlook on Thursday to negative from stable, citing a milder
fiscal consolidation path than previously announced.
The other two main rating agencies also have a negative
outlook for Croatia.
($1 = 5.8475 Croatian kunas)
(Reporting by Igor Ilic; Editing by Jon Hemming)