General strike paralyses Argentina

Workers are protesting against plans for huge pay cuts

Transport and other public services were brought virtually to a standstill in Argentina on Thursday as trade unions staged a general strike against government spending cuts.

Police were deployed on the streets of the capital, Buenos Aires, where workers blocked roads in anger at planned reductions in wages and pensions.

Markets are watching Argentina's crisis nervously

It was the second day of protests against the austerity measures, which Argentina President Fernando De La Rua says are needed to balance the budget and avoid defaulting on the country's $128bn debt.

A three-year recession has sapped the country's ability to repay the debt and undermined investors' confidence in the Argentine economy.

Many buses and trains failed to run, government offices remained largely empty, and hospitals dealt only with emergencies on Thursday.

Opposition unions were protesting against $1.4bn in cuts this year as the government aims for a zero deficit policy, spending no more than its revenues.

Hugo Moyano, head of the General Workers Confederation, the largest union organisation said Argentina's political and economic leaders were bent on destroying Argentina and its workers.

"We are going to fight to keep them from punishing us," he said.

Government spokesman Juan Pablo Baylac criticised the strikers, saying they "give nothing to Argentine society".

Crisis

An atmosphere of crisis has enveloped the country since Argentine stocks tumbled last week on worries about the country's long-term solvency.

In response, President De La Rua announced an austerity package, including 13% cuts in state salaries and pensions.

President De La Rua (R) still needs to get the measures through Congress

Markets and investors have mostly welcomed the measures, but many Argentines have found it harder to accept the seventh austerity plan in two years.

Roughly a third of Argentina's 36 million population lives in poverty, and unemployment rose to over 16% this year.

Doubt is also growing over whether Mr De La Rua will be able to get the measures through Congress.

As the protests swell on the ground, opposition legislators have said they will not support salary cuts, and there appears to be little more agreement within the government coalition.