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Monti popularity dips over austerity, unions call strikes

By Philip Pullella

ROME (Reuters) - Italy's new Prime Minister Mario Monti, trying to push through a tough austerity package he says is vital for the country's financial salvation, faced two calls for national strikes and saw a dip in his public support on Wednesday.

The three main trade union confederations, after divisive dithering over their individual responses, announced a joint national three-hour strike in the private sector for December 12.

Public sector workers will strike for eight hours on December 19 against the 30 billion-euro ($40.3 billion) package affecting pensions and property taxes.

The labor actions were called as Monti was hit by a new poll that showed his overall approval rating had dropped to 64 percent from 73 percent late last month before the details of the package were known.

Monti, a former European Commissioner who formed a government of technocrats on November 17, said in a television interview on Tuesday night the package was vital to avoid the risk of Italy becoming insolvent and no longer being able to pay public sector salaries or pensions.

He said he was confident Italians would see that sacrifices were necessary and the measures were fair. "I'm sure there will be protests, and I can even consider them justified, but I'm sure that citizens will understand," he said.

DISTRIBUTING PAIN

Commentators said there was little risk the package would not be passed, because political parties who back Monti realize the country is in dire straits, but there would continue to be aggressive demands to change it.

The survey by the IPSO organization for the Corriere della Sera newspaper said 66 percent of Italians approved of the measures overall but a breakdown of the data showed they were divided over whether the pain was fairly distributed.

While 93 percent said they agreed with levies hitting the rich, such as new taxes on large pleasure boats, luxury cars and private planes, only 35 percent agreed with plans to reinstate a tax on primary residences.

While 82 percent agreed with plans to reduce funding for political parties and cut the costs of the administrative bureaucracy, only 30 percent approved of plans to increase VAT by two percentage points from September 2012.

Only 39 percent agreed with the pensions changes.

From the start of 2012, pensions will be calculated only on the basis of contributions paid into the system, rather than on end-of-career salaries. The minimum age for retirement was increased to 62 from 60 for women and to 66 from 65 for men.

One of the most controversial steps is the elimination of the annual inflation adjustment for those with monthly pensions of more than 936 euros.

Unions and some political parties say this is too low and will hurt many people.

Welfare Minister Elsa Fornero told Reuters on Wednesday that the government might be able to raise the cut off for inflation adjustment for pensions to 1,400 euros if another way of obtaining the necessary savings could be found.

The package foresees a 1.5 percent, one-off tax on the money brought back to Italy under the so-called "tax shield" amnesty allowed under the previous government of Silvio Berlusconi.

The poll showed that 73 percent of Italians agreed with this measure in principle, but unions and political parties backing Monti's technocrat government have called for the tax, which affects mostly the rich, to be at least doubled to 3 percent.

Monti has moved to head off any attempts to water down the package with amendments, saying the measures are "carefully weighed" and that Italy has little time to approve the plan.

Both Berlusconi's The People of Freedom party and the leftist Democratic Party said they would suggest changes to the package.

The poll showed 70 percent of people agree with Monti's measures against tax evasion.

They include a ban on cash transactions above 1,000 euros - down from the current 2,500 euros - the use of electronic payment methods in public administration, and tax breaks for small companies and artisans who declare their income.

(Additional reporting by Francesca Piscioneri; editing by Rosalind Russell)

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