Austria reaches pay deal with civil servants after protests

Reuters News
Posted: Jan 17, 2014 9:48 AM

VIENNA (Reuters) - Austria's government agreed on Friday to raise the wages of its 200,000 civil servants by 1.9 percent this year after big protests against the new government.

Finance Minister Michael Spindelegger said the agreement, which will cost the government more than 190 million euros ($258 million), would not endanger his goal of eliminating the structural budget deficit by 2016.

Spindelegger's conservative People's Party and Chancellor Werner Faymann's Social Democrats scraped to power with a combined majority in September elections but then spent more than two months thrashing out a coalition agreement.

Faymann had promised to protect pensions and Austria's high standard of living, while Spindelegger wanted to impose spending cuts that would allow for tax reductions in a few years' time.

The set of cuts they agreed on angered many voters including egg-throwing students, teachers and civil servants, who turned out in their thousands to protest in December.

The deal agreed on Friday also promises civil servants a pay rise of 0.1 percentage point above inflation in 2015.

Spindelegger portrayed the compromise as showing the strengths of the new government by achieving an agreement in just two months - a short time by Austrian standards.

"The budget track heading towards a zero structural deficit is not endangered by the deal," he said in a statement. "Our common goal is solid finances."

But Josef Moser, head of the Austrian Court of Audit, said that even without extra spending the government would not reach its target.

"Additional measures will only make the road to a balanced budget harder," he told ORF radio.

($1 = 0.7352 euros)

(Reporting by Georgina Prodhan; Editing by Hugh Lawson)