AFP - Zimbabwe's unity government is broke and cannot afford to match union demands for higher salaries, Prime Minister Morgan Tsvangirai told a May Day rally on Friday.
"This government is broke," Tsvangirai told the crowd. "We are only able to pay you allowances. All of us from President Mugabe to government workers are earning a hundred dollars."
Tsvangirai said the state wished to increase the 100 dollar allowance paid to state workers but could not afford to meet growing demands for better wages.
"No-one is paying tax at the moment. If government is not getting taxes, where will the government get the money to pay salaries?," he asked.
"Your demands must be realistic and within the capacity of the government which is the major employer."
Before Tsvangirai addressed the crowd, the Zimbabwe Congress of Trade Unions threatened to go on strike unless wages were increased to 454 dollars.
Zimbabwe's teachers on Wednesday also vowed mass action when the new school term begins after government reneged on a pledge to increase their salaries.
Tsvangirai, a former trade union leader who took office less than three months ago, urged Zimbabweans to bear with the new government as it seeks ways to address the problems facing the country.
"You supported us during hard times, we will pay you back," he said.
"Give us time. I plead with you. We are conscious of the problems of the workers. I come from a trade union background and I know that 100 dollars is not enough but at least you can buy porridge for your children.
Following months of political wrangling, Tsvangirai in February joined former rival President Robert Mugabe in a unity government that is now tasked with rebuilding Zimbabwe after years of ruin.
Tsvangirai said he had a good working relationship with Mugabe despite divergent political views, saying "we sometimes argue on some issues until we agree".
"We are working cordially," he added. "Everyone recognises that there is no other way but to go through this route. It's a chance to have peace, stability and progress."
The government is seeking 8.5 billion dollars over three years to revive the economy that has been shattered by a decade of hyperinflation.
Four hundred million dollars in credit lines were recently secured from neighbours, but major donors have said they want Mugabe to enact concrete reforms.
Human Rights Watch has said donors should withhold development aid until Zimbabwe improves its rights record by cracking down on violence on white-owned farms and ending police intimidation and arrests of activists.