Egyptian President Hosni Mubarak, responding to unrest over low salaries and high food prices, proposed on Wednesday a salary increase of about 30 percent for public sector employees.
In a May Day speech to trade unionists, he told his government to find the extra revenue it will need to cover the cost, expected to be about 9 billion Egyptian pounds ($1.7 billion) above what it had planned in its draft 2008/9 budget.
"It will be about 30 percent," said Mubarak, whose government faces the possibility of a stay-at-home protest by leftists, liberals and Islamists on May 4, his 80th birthday.
Instead of waiting for the start of the 2008/9 financial year on July 1, the government should try to pay the salary increases as soon as possible, Mubarak said.
Tamer Waguih, an activist with the opposition group Kefaya, said Mubarak had made the offer to placate the angry poor.
"This is a measure in an attempt to preserve his regime. It is not related to love of the poor or any social agenda... He has been advised that the country, the working classes and the poor, are going to explode," he added.
The government, on the defensive after a wave of strikes and protests, had already promised the annual rise would be higher.
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 up 45.2 percent.
Tax Commissioner and Deputy Finance Minister Ashraf Al Arabi said the salary increase would probably be across the board and the intention was to find all the additional revenue needed so that the budget would remain at the same level.
Waguih said Mubarak's proposal could embolden the political forces behind the call for a general strike on Sunday, backed by Kefaya and the influential Muslim Brotherhood.
"People will conclude the government is weak, so they will be more courageous... But I don't think that May 4 will be a strong event because no workers group are backing it," he added.
The Brotherhood, the main opposition force in Egypt, joined on Tuesday the campaign for the strike, which began as a proposal by leftist and liberal activists.
The activists tried to organize 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 muted.
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 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.
"These (fuel subsidies) go to those who can pay rather than to those who cannot. This requires a review of the correct situation, but gradually," Mubarak said.