Jan Cienski in Warsaw -

Every hour, hundreds of nurses dressed in white uniforms line up outside Poland's Cabinet office and shake bottles filled with coins, their way of demanding a steep pay increase, a sign of increasing wage pressures in the fast growing Polish economy.

"I work over 400 hours a month and I earn only PLN2,500 a month," complains Tomasz Jatkiewicz, a nurse at Warsaw's Psychiatric Institute, who has camped out with hundreds of other nurses in a rapidly growing tent city across the street from the prime minister's office.

Polish inflation data this Friday, July 11 is expected to support a further rise in interest rates this month or next as the central bank seeks to quell rising wages in a country where the average nurse's salary is only about PLN1,300 (€350) a month and they are fighting to more than double it to PLN3,000.

"I want to work normal hours for normal pay," says Jatkiewicz.

Growing unrest

The nurses' strike has grown rapidly. A delegation came to Warsaw a few weeks ago to meet with Jaroslaw Kaczynski, the prime minister, to complain that wage increases promised after a bout of labour unrest last year hadn't materialized.

The prime minister refused to meet with them and four nurses occupied his office. Kaczynski then made things worse by denouncing the nurses as criminals and part of a politically motivated conspiracy aimed at overthrowing his government.

That kind of tough talk worked in past confrontations with judges, lawyers, journalists and civil servants, but it backfired when applied to hundreds of women wearing white nursing caps.

With opinion polls showing overwhelming support for the nurses and the protest spreading, Kaczynski backed down and agreed to meet with the four nurses. They eventually agreed to leave his office, but the tent city outside stayed, despite Kaczynski's promise to raise nurses' salaries by 50% over the next few years.

The nurses' strike poses immense danger for the government. Doctors, who earn less than €400 a month, have been protesting for more than six weeks, also demanding higher pay. They want to earn three times the average national salary. About 300 of Poland's 800 hospitals are on strike and thousands of doctors have said they plan to quit the government system and go into private practice. If the government gives way to the nurses, it will also have to do so for doctors.

Poland's government spends only about 4% of GDP on health care, half the EU average. The government has promised to increase that to 6% by 2009, but it is clear there's not enough money in the budget to do so.

Giving in to nurses also sends a message to other public sector workers that protesting outside Mr Kaczynski's office will fatten their pay packets.

Politically powerful miners, who have a decades-old tradition of extracting benefits from politicians, have already begun to appear in the nurses' tent city. Miners at the state-owned Kompania Weglowa, Europe's largest coal mining firm, plan to demand pay increases of 30%. Management at the company, which is expected to lose about PLN200m this year, offered 4.8%.

Teachers are also threatening to strike. "We are in the midst of a wave of wage demands," said PM Kaczynski, who has proposed holding a referendum on increasing taxes on the rich to pay for better health care.

Public sector wage demands follow on the heels of swift pay increases in the private sector, where salaries are rising at an almost 9 % rate. The economy grew by 7.4% in the first quarter, and growth is expected to come in above 6% for the year, above what most economists consider to be a sustainable rate.

Citing increasing wage pressure, the central bank unexpectedly raised interest rates by a quarter point to 4.5% in June, the second rate increase in three months, as inflation reached 2.3%, edging closer to the bank's 2.5% mid-point.

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