Italy boosts public sector pay ahead of PM Renzi's referendum

ROME (Reuters) - Italy's government signed a deal with trade unions on Wednesday to hike public sector pay for the first time in seven years, just days ahead of a referendum on which Prime Minister Matteo Renzi has staked his career.

In 2017 public workers will get a gross average increase of 85 euros per month, Susanna Camusso, head of Italy's largest union, the CGIL, told reporters after the signing.

Public sector pay has been frozen since 2009, while Italy struggled to rein in its burgeoning public debt, the highest in the euro zone after Greece's.

"We got positive answers on all the questions on the table," said Camusso, whose union is urging its members to vote 'No' in the Dec. 4 referendum over Renzi's proposal to reform the constitution.

Renzi has been campaigning hard for his reform, appearing repeatedly in talk shows, online interviews and radio programs as he tries to turn around what polls indicated was a lead for the 'No' camp when a blackout period began on Nov. 18.

Renzi has said he will resign if he loses the vote on his plan to abolish an elected upper house and replace it with a chamber of regional representatives with much reduced powers.

The reform also proposes taking back key decision-making powers from the regions.

(reporting by Francesca Piscioneri, writing by Gavin Jones)

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