UPDATED: Tunisian govt and top union agree public sector wage increase deal

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TUNIS, Sept 14 (Reuters) – Tunisia’s government and a powerful labour union have agreed a public sector wage increase over the next three years, part of their talks on wider economic reforms aimed at securing a foreign bailout for state finances.

UGTT union officials and a state news agency said on Wednesday the agreement would lift wages for state employees by 3.5% a year from 2022-25, a move that could ease escalating social and economic tensions.

The union officials said the deal will be signed on Thursday, without giving further details.

It was not initially clear whether the deal would also include agreement on cuts sought by the International Monetary Fund to spending on state subsidies and publicly owned companies.

The UGTT, which says it has more than a million members and has proven able to shut down major sectors of the economy with strikes, has previously resisted subsidy cuts or restructuring of loss-making state firms.

Tunisia’s government is seeking billions of dollars in loans from the IMF to help it finance its budget, and wants to offer reforms that will show donors it is putting its public finances on a sustainable trajectory.

The IMF has said the government needs a formal agreement on reforms with the UGTT before it will approve a loan programme. Other major donors have told Tunisia they will not offer budget support unless the government enters an IMF programme.

Tunisia is already facing shortages of some subsidised goods in shops across the country, which the government has blamed on speculators and hoarding, but which UGTT officials have ascribed to difficulties paying for imports.

(Reporting by Tarek Amara, Editing by Louise Heavens, Kirsten Donovan)

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