Polish PM denies wage increase is pre-election gift

WARSAW, Aug 28 (Reuters) Polish Prime Minister Jaroslaw Kaczynski today denied accusations that a big pay rise for public sector workers was an attempt to influence voters ahead of an expected October election.

Kaczynski, who faces an uphill battle to stay in office, insisted the state could shoulder a 10 percent increase in wages for public workers like teachers and nurses, as well as a more than 20 percent rise in the minimum wage.

''We can afford this,'' Kaczynski told the public radio. ''This was an agreement prepared a long time before the election.'' Yesterday, Kaczynski signed an unexpectedly generous agreement with one of Poland's two largest unions to boost minimum wage and public sector salaries from next year.

Opposition parties and business leaders denounced the move, calling it a political ploy to win over voters. They said the pay rise could lead to higher unemployment.

''The agreement is a clearly political move that is part of an election campaign,'' the Confederation of Polish Employers, a business lobby group, said in a statement.

The government also postponed a planned pension reform that would have eliminated some early retirement schemes.

The delay is expected to cost the state coffers as much as 18 billion zlotys (6.4 billion dollar) over the next 25 years.

Poland is expected to head to the polls for a parliamentary election later this year after Kaczynski ended a stormy coalition with two junior fringe parties earlier this month.

He is now leading a minority government.

Parliament will vote next week on whether to cut short its term two years ahead of schedule, paving the way for an election in October.

Kaczynski has used the threat of early polls repeatedly over the last two years to bring unruly coalition partners into line.

The outcome of the parliamentary vote is uncertain after leaders of the centre-left SLD party, whose backing is needed for the required two-thirds majority, indicated they instead want the parliament to investigate charges that Kaczynski's justice minister spied on politicians and journalists.

Recent opinion polls show Kaczynski's conservative Law and Justice party trailing the centre-right Civic Platform by as many as nine points, although many voters are undecided.

Kaczynski remained confident of victory. ''I am convinced the Platform will not win the election,'' he said.

REUTERS LPB PM1730