Striking Panama teachers march on president's palace

PANAMA CITY, Aug 18 (Reuters) Thousands of striking teachers marched to Panama's presidential palace to demand higher salaries, and threatened to extend their strike indefinitely if their demands are not met by Friday.

The labor dispute is part of a wave of public-sector pay claims that is putting pressure on the government ahead of an October referendum on whether to expand the Panama Canal.

Around 6,000 protesters converged in a colonial square near the presidential palace yesterday, blowing horns and beating drums, and called for the resignation of the education minister, Miguel Canizales.

The teachers, from the Teachers' Action Front, or FAM, are demanding a 190 dollar-a-month raise -- more than double the government's last offer of , which they rejected.

The FAM is linked to organizations that led pension reform protests last year, and some teachers are linking their pay claim to a 5.25 billion dollar proposal to expand the country's interoceanic canal, which modern ships have outgrown.

The teachers were joined by social security workers and construction unions, who are among those demanding higher pay.

''If the government really wants to win a yes vote in the referendum they have to respond to society's expectations. Not just teachers, but workers, peasants, poor rural people,'' said teacher Sebastian Segura.

Panama's 37,000 teachers were a key group that forced the government to backtrack last year from a plan to raise the country's retirement age.

REUTERS PDS PM0745