TUNIS: Tunisia's UGTT union has cancelled a nationwide strike by public workers scheduled for Wednesday after reaching an agreement with the government on raising public sector wages in a deal that could ease social tensions in the country.

International lenders have urged Tunisia to freeze wages as part of public sector reforms aimed at reducing the country's budget deficit.

"We decided to cancel the strike of Oct. 4," Nourredine Taboubi, head of UGTT, told reporters. "this will help to create a stable social climate. Our agreement is an increase in wages in state companies in 2018, 2019 and 2020."

Taboubi added that the union had also agreed as part of the deal that reform of state companies will be "in a manner that ensures the sustainability of the public sector".

The deal will be signed in the next few days, he said.

Prime Minister Youssef Chahed said in March that ailing public companies needed to be restructured quickly as the North African country struggles with an economic crisis and ballooning budget deficit.

Public companies have accumulated losses of about $3 billion, officials said in March.


(Reporting by Tarek Amara Editing by David Goodman) ((tarek.amara@thomsonreuters.com;))