RABAT (Reuters) – Morocco has agreed to raise public sector salaries in a handout estimated at more than $5 billion over three years as demands for reform put pressure on the Arab world’s longest-serving dynasty.

State television channel RTM said on Tuesday Prime Minister Abbas Al Fassi had signed a draft memo with unions over the wage deal as well as an increase in the overall minimum wage.

It is the latest in a series of handouts as King Mohammed’s government tries to prevent a spillover of popular revolt from other north African countries. Thousands of Moroccans marched peacefully on Sunday to demand reforms.

“This is quite generous,” said Mustapha Khalfi, editor of Attajdid newspaper, mouthpiece of the main opposition party, which is linked to a union that took part in the talks.

He estimated the total government cost at 43 billion dirhams ($5.4 billion) over three years and said it would be financed in part by a reduction of 10 percent in spending by all government ministries and some other state bodies.

State television said public sector employees would get a net 600 dirhams ($80) per month increase as of May 1. The minimum pension for public and private sector pensioners would go up almost 70 percent to 1,000 dirhams per month.

The minimum wage for private sector employees would be raised by 10 percent from July and 5 percent at the start of 2012, it added. The current minimum wage is 2,110 dirhams.

Finance ministry officials could not be reached for comment on the potential cost of the package.

State television also quoted Agriculture Minister Aziz Akhennouch as saying the debt of 100,000 farmers would be lowered and rescheduled.

Agriculture is the top employer in the country of more than 32 million.

SUBSIDIES

Morocco, which unlike other Arab monarchies has no oil and natural gas of its own, almost doubled funds allocated to subsidies in February to counter an increase in global commodities prices and rising food costs.

The government has also promised jobs in the public sector for 4,300 graduates and higher wages and benefits to its 47,000-strong auxiliary forces, used to tame protests and fight riots.

Khalfi said the latest handout would not end demands for change. His paper speaks for the main Justice and Development opposition party, a moderate Islamist entity affiliated to a union which was part of the wage talks.

“People’s expectations, like anywhere else in the Arab world, are very high and the majority is silent and watching how far the government will give. But there are pockets of resistance to serious change,” Khalfi said.

The youth-led February 20 Movement has been putting King Mohammed and his government under pressure to reform a political system that critics say puts too much power in the hands of the royal court at the expense of elected officials.

On Sunday, thousands responded to the group’s call for a third day of peaceful protests in three months.

Analysts had been expecting the government to speed up an agreement with the unions ahead of Labour Day, May 1, when the February 20 Movement has said it will join trade unions in their marches.

“The number of those taking part in the protests organized by the movement is not declining,” said political analyst Ahmed el-Bouz. “What is interesting is that protests by the movement are attracting people with social and even individual grievances.”

The Alaouite dynasty has ruled Morocco for 350 years.

(Editing by Matthew Tostevin)

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