Egyptian President Hosni Mubarak has proposed a salary increase of about 30 percent for public-sector employees to compensate them for recent large increases in prices.

"It will be about 30 percent," Mubarak said in a May Day speech to the national trade unions federation.

Instead of waiting for the start of the financial year on July 1, the government should try to pay the increase with immediate effect, said Mubarak.

"I ask the government and the parliament to agree quickly on the best options and ... the measures necessary to make available real resources so that we can go ahead with implementation with effect from May," he said.

He did not elaborate on the effect on the government's 2008/9 budget, which in draft form allows for a 15 percent increase in salaries and a budget deficit equivalent to 6.9 percent of gross domestic product.

The government, on the defensive after a wave of strikes and protests against high prices and low salaries, had already promised that the annual salary rise would be higher than the 15 percent it initially proposed in the budget.

Urban inflation in the year to March hit 14.4 percent, the highest rate in three years. The poorest Egyptians, including the many low-paid civil servants, have been hit hardest because they spend a much greater proportion of their incomes on food.

In the year to March, bread and grain prices soared 48.1 percent, fruit and vegetable prices rose by over 20 percent, and edible oils were 45.2 percent more expensive than a year ago.

Finance Minister Youssef Boutros-Ghali told Reuters last week that the government wanted to give public-sector workers rises of more than 15 percent, without adding to the deficit.

The parliament and the ruling National Democratic Party should find the extra money, he added.

Mubarak's proposal could help weaken support for a general strike on Sunday, Mubarak's 80th birthday. The main opposition force in Egypt, the Muslim Brotherhood, joined on Tuesday the campaign for the strike, which began as a proposal by leftist and liberal activists.

The same groups tried to organise a general strike on April 6, to coincide with a strike by textile workers in the Nile Delta, but the response in Cairo and other cities was modest.

Mubarak also proposed an overhaul of the government's subsidies policy, which weighs heavily on the government budget.

In 2008/9 the government will spend 20 billion Egyptian pounds ($3.7 billion) on food subsidies and 63 billion on fuel subsidies, he said. The comparative figures for 2007/8, which ends on June 30, are 15 billion and 57 billion. - Reuters