UPDATE 1-Tunisia, union reach deal to raise wages of public employees

Tunisia's government reached a deal with the powerful UGTT union to raise the wages of 670,000 public employees, three sources close to negotiations told Reuters on Thursday, ending months of tension in the North Africa country. Tunisia is under pressure from the International Monetary Fund to freeze public-sector wages -- the bill for which doubled to about 16 billion dinars ($5.5 billion) in 2018 from 7.6 billion in 2010 -- to help reduce its budget deficit.

The North African country's economy has been in crisis since the autocrat Zine al-Abidine Ben Ali was toppled in 2011, with unemployment and inflation shooting up. On Wednesday, thousands of Tunisian teachers rallied near the prime minister's office to demand better work conditions and higher wages. Last month, rail, bus and air traffic was halted and street protests drew thousands as UGTT staged a one-day nationwide strike.

The union threatened a new nationwide strike this month if the government did not agree to raise wages. It is likely to cancel the strike now that an agreement has been reached. An announcement is expected later today. So far, the details of the deal have not been disclosed.

Tunisia aims to cut public-sector wages to 12.5 percent of gross domestic product in 2020 from about 15.5 percent now, one of the world's highest levels, according to the IMF, which struck a $2.8 billion loan agreement with Tunisia in December 2016. (Reporting By Tarek Amara)

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