He announced a freeze on public-sector wages.

Reserves are fast drying up and Athens admits it will run out of money in mid-October when public-sector wages and pensions need to be paid.

The minimum wage, public-sector wages, and old-age pensions are routinely raised twice a year to ensure that base income is not eroded by inflation.

A more political concern was the legacy of the 1970 - 4 government's experience with incomes policies and public-sector wages.

This would be achieved through cuts in the civil service, the freezing of public-sector wages and the privatization of state enterprises.

The issue of public-sector wages has been simmering since March when, after long negotiations, the Government froze wages for all federal employees for April and May.

Germany's Government is now trying to slow inflation by taking a hard line on public-sector wages, a policy that has produced widespread strikes.

After their victory, the Socialists passed an 18 percent increase in public-sector wages.

As from April 1 the basic public-sector wage would be raised from 100,000 to 450,000 australs per month.

This was partially offset by a 30 per cent increase in public-sector wages and those of the military.