Powerful Tunisian union threatens strike, calls protests over budget

October 20, 2016 4:30 PM EDT

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TUNIS (Reuters) - Tunisia's powerful UGTT labor union threatened on Thursday to hold a general strike and called protests against the government's plans to freeze public wage increases as part of measures to control the budget deficit.

Under pressure from international lenders for reforms to cut spending, spur growth and create jobs, Prime Minister Youssef Chahed has proposed a broad package of initiatives to control the fiscal deficit and increase government revenues.

But proposed new taxes and the halt to public wage increases included in the government's 2017 budget has worried many Tunisians already wary about the lack of economic progress since their 2011 revolution ousted autocrat Zine El-Abidine Ben Ali.

"We call for regional protests, a large national protest in Kasbah Square (near the Prime Minister office) and another in front of the parliament," the UGTT union said in statement, without giving a date.

The parliament is expected to debate the 2017 budget in the next few days after it was approved by the cabinet.

The UGTT, the country's main labor union with 900,000 members, also called for a general strike to protest against plans to freeze the increase in public wages, which it warned could trigger protests.

The UTICA industry and business employers' association, one of the country's major economic lobbying groups, said‮ ‬on Wednesday it rejected a proposed exceptional tax contribution on business as a way for the government to generate finances.

Thousands of lawyers are expected to go on strike on Friday to protest against new tax measures against their industry and other sectors such as healthcare.

Tunisia expects to seek $2.78 billion in foreign loans next year - nearly double its 2016 external financing needs - to help cover a 2017 fiscal deficit seen at 5.4 percent of GDP.

Tunisia has been hailed as a model for democratic progress since its 2011 uprising against Ben Ali led to free elections and political stability. But many Tunisians are demanding jobs and economic progress to match.

(Reporting By Tarek Amara; editing by Patrick Markey and Andrew Heavens)

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