Airliners were grounded, trains halted and tax offices shut on Wednesday as Greek state workers walked off the job to protest against austerity, defying a plea by the government to rally behind its effort to fend off national bankruptcy.

Hospitals ran on emergency staff and some state schools closed in the first nationwide strike against EU/IMF-prescribed salary cuts and layoffs after a summer lull. In Athens' airport, more than 400 domestic and international flights were canceled, an airport spokeswoman said.

The country's main labor unions ADEDY and GSEE expect hundreds of thousands of people to strike and thousands to take to the streets, while EU and IMF inspectors continue an inspection of Greece's finances that will decide on the release of an aid tranche Athens needs to pay wages and bills.

Unfortunately the new measures are just extending the unfair and barbaric policies which suck dry workers' rights and revenues and push the economy deeper into recession and debt, GSEE spokesman Stathis Anestis told Reuters.

With this strike, the government, the EU and the IMF will be forced to reconsider these disastrous policies.

The Greek government shocked international financial markets this week by announcing that it would miss 2011 deficit targets set as conditions of a bailout aimed at staving off bankruptcy, despite a series of tax hikes and spending cuts.

Finance Minister Evangelos Venizelos said on Tuesday Greek finances for this year could slip still further if the country failed to rally round the reforms and show national cohesion and solidarity. [ID:nL5E7L413R]

State workers, students and pensioners will start gathering in central Athens at 0800 GMT. A few hours later they will march on the capital's central Syntagma Square and protest outside parliament.

If we don't take our lives back into our own hands and go on strike, how will we survive?, said Athens resident Maria Bargiadaki, a public sector worker.

Communist union group PAME is expected to stage a separate rally. Police, fire brigade and coastguard unions said they would join the central Athens demonstrations.


The country's main labor unions, representing about half Greece's 5 million-strong workforce, have staged repeated strikes since Athens asked the European Union and the International Monetary Fund for a 110 billion-euro bailout last year.

They say a new wave of salary and pension cuts, tax hikes and layoffs announced last month is hurting only the poor and pushing the economy deeper into recession. They have called a general strike on October 19.

Workers at state utilities marked for privatization, such as dock workers at the country's ports in Piraeus and Thessaloniki and Public Power Corporation, will join the strike on Wednesday.

The government is panicking and has no strategy, said Thessaloniki port unionist, Fani Gourgouri. These measures are only extending poverty. We'd be willing to shoulder the cost and say 'yes' to austerity if they proceeded with reforms that would create jobs instead of cutting them.

About 1,000 police will be deployed in central Athens throughout the day, a police official said, fewer than in similar anti-austerity protests in June, when 100 were injured during clashes with riot police.

Analysts say the ruling Socialists, who face dissent within their own ranks and lag behind the conservatives in polls, have no choice but to implement the EU/IMF-prescribed reforms despite protests, to keep receiving aid and send a message at home and abroad that it is delivering on pledges to reform.

I expect a lively and big protest, but not violence like the riots in 2008, said Theodore Couloumbis of the ELIAMEP think-tank. The government is not expected to change course.

The state workers are particularly angry about a plan to put 30,000 of them on the road to redundancy as early as this year. They will be placed in a labor reserve with reduced pay and at least 12 months to find a new job or be fired.

In a further sign of the difficulty to push through unpopular reform, Socialist lawmaker and former Labor Minister Louka Katseli said she would vote against a reform of labor rules, asked by the EU and IMF, if it was put to parliament.

I stated clearly and I mean it that I cannot vote for an abolition of the collective labor agreement, Katseli told Mega TV. It is important for our partners to know where the red lines are.

Euro zone ministers postponed on Monday a vital aid payment to Greece until mid-November and talked of reopening a private sector bond swap deal.

Venizelos said the country had enough cash to cope until then and insisted that ministers are not preparing for a Greek default, despite the ominous delay.

(Additional reporting by Tatiana Fragou and Daphne Papadopoulou; Writing by Renee Maltezou and Ingrid Melander, Editing by Rosalind Russell)