* Union threats won't halt 10 pct state wage cut -labour min
* Says spending cuts right for business, no major econ impact
* Unemployment to edge up again
By Roman Gazdik and Jason Hovet
PRAGUE, Sept 15 (Reuters) - The Czech government won't back
down from its plan to cut the overall public sector wage bill by
10 percent next year despite growing threats of protests and
strikes, Labour Minister Jaromir Drabek said.
Czech public sector unions plan mass demonstrations on Sept.
21 to protest the cuts in salaries and jobs, arguing that they
shouldn't pay for improving the state's fiscal situation, which
is better than that of many of its European Union peers.
Unions across Europe are planning anti-austerity action, but
such moves are rare in the Czech Republic and will be the first
test of the government's resolve to carry out its savings plan.
On Monday, the healtcare workers' union put its members on
alert for a possible walkout coinciding with municipal and
Senate elections next month, and doctors have threatened mass
resignations.
Drabek, a deputy chairman of the conservative party TOP 09
that joined two other austerity-minded parties in founding a
ruling coalition after an election in May, said that the cut in
the overall wage bill would not be lowered.
"It is a line that cannot be crossed, an issue on which the
government coalition stands... It is a fundamental agreement of
the three coalition parties," Drabek told Reuters in an
interview.
TOP09, the Civic Democrats and the Public Affairs party
formed a coalition in July promising to fight corruption, clean
up welfare abuse and cut the budget deficit.
With state debt around 37 percent of gross domestic product,
half of the EU average, the Czechs are in better fiscal shape
than most central European and euro zone periphery countries.
But the debt has been rising fast and the government has
warned that the country could end up in a Greek-style financing
crisis several years down the road if it does not reform its
pension, health and welfare systems.
The median gross monthly wage in the public sector was
23,380 crowns ($1,231) in the second quarter, above the private
sector median of 21,420.
Prime Minister Petr Necas has said public sector workers had
to take their share of the cuts, following tens of thousands of
jobs lost in the private sector over the past two years.
CUTS TO BENEFIT
Ministries have begun announcing job cuts, with the Finance
Ministry letting go about 900 staff at its headquarters and
affiliated institutions. Other ministries have also announced
hundreds of job cuts.
Drabek said the open structure of the economy, which depends
on exports mostly to Germany and other EU states, meant that
there should be no concern that the lower consumption that comes
with higher unemployment would hurt the recovery.
"The savings measures should not have a significant negative
impact on Czech economic development," he said.
Czech unemployment stood at 8.6 percent in August, having
fallen steadily from a six-year high of 9.9 percent in February,
but it is set to tick up again due to budget cuts and as
businesses stay cautious on the economic recovery.
Drabek said that unemployment should hover between 8.5
percent and 9.5 percent next year, but that there have been
times when unemployment was at this level or even higher in the
past 20 years and that it did not call for any special measures.
"Of course it is a problem from the social perspective, but
it is not an isolated situation," he said.
(Editing by Hugh Lawson)
