Secretary General of the Tunisian General Labour Union (UGTT) Noureddine Taboubi gives a speech during a rally to mark a Labour Day, in Tunis, Tunisia May 1, 2018.
Secretary General of the Tunisian General Labour Union (UGTT) Noureddine Taboubi gives a speech during a rally to mark a Labour Day, in Tunis, Tunisia May 1, 2018. Reuters / ZOUBEIR SOUISSI

Tunisia's powerful UGTT union on Tuesday called a national public strike for June after the government refused to increase wages, an escalation that may hinder the government's efforts to reach a deal with the International Monetary Fund.

Tunisia faces a serious financial crisis and is seeking a $4 billion loan from the IMF seen as necessary to ward off national bankruptcy, in exchange for unpopular reforms, including cuts in food and energy subsidies and wage freezes.

With more than 1 million members, the UGTT is Tunisia's most powerful political force. The strike on June 16 will present the biggest challenge yet to President Kais Saied after his seizure of broad powers and moves to one-man rule.

The UGTT has rejected proposed spending cuts and instead wants wage increases for state workers as inflation reached a record level of 7.5% in April.

The union said the strike would include 159 state-owned firms including airlines and maritime and land transport companies.

The UGTT is demanding an immediate reform plan for companies that does not include selling them.

Public companies are suffering a severe financial crisis involving billions of dollars due to mounting losses, debts and increases in the number of employees.

Saied, who took executive power and dissolved parliament to rule by decree, has since said he will replace the democratic 2014 constitution with a new constitution via referendum on July 25.

The president's opponents accuse him of a coup that has undermined the democratic gains of the 2011 revolution that triggered the Arab Spring, but he says his moves were legal and needed to save Tunisia from a prolonged political crisis.

While Said focuses on changing Tunisian politics, critics say he does not pay enough attention to the North African country's collapsing economy. He has repeatedly said that Tunisia is rich but that the political elite stole the people's money, which his opponents describe as populism.

Tunisia's budget deficit will expand to 9.7% of GDP this year, compared with a previously expected 6.7%, due to a stronger U.S. dollar and sharp increase in grain and energy prices, the central bank governor, Marouan Abassi, said this month.