Clashes over Sri Lanka pension plan hurt 23

COLOMBO (Reuters) - Sri Lanka's trade unions on Monday threatened to shut down the Indian Ocean nation's free trade zones after clashes between police and workers striking over a private pension proposal left at least 23 injured.

President Mahinda Rajapaksa's ruling party later said it was temporarily suspending the pension bill in parliament, and the government said the free trade area where the clashes took place would be closed on Tuesday to "restore industrial peace".

Police said they fired tear gas and live ammunition while scuffling with several thousand striking employees at the free trade zone near Sri Lanka's only international airport, located about 33 km (20 miles) north of the commercial capital, Colombo.

In the first big union action to hit Rajapaksa's government since a 25-year civil war in 2009, a union backing the Marxist Janatha Vimukthi Peramuna party has led a three-day strike over a pension plan employees and employers alike oppose.

Authorities said at least eight people were wounded by police including by gunfire after warning shots were ignored, and 15 officers were hurt when an estimated 5,000 people began throwing rocks and stormed a police station, damaging vehicles.

"When a large crowd stormed in, police fired in the air and then later fired at them to control the gathering," Inspector General of Police Mahinda Balasuriya told a press conference.

The Intercompany Employees' Union (ICEU) blamed police for turning violent what it called a peaceful protest.

"We won't allow any production activities in all free trade zones island-wide from tomorrow if the government doesn't release the arrested employees and conduct an impartial inquiry why the police fired live bullets at unarmed employees," ICEU president Wasantha Samarasinghe told reporters.

PENSION CONFUSION

The JVP and its affiliated unions, which have in the past been a significant force whose actions augured political unrest, oppose the new pension plan on the grounds it will not guarantee retirement savings and benefits as is the case now.

Employers have complained too, saying it is an additional cost. The government has been faulted for failing to explain the plan clearly and delineate which workers it covers.

On Monday, Labour Minister Gamini Lokuge said free trade zone employees were exempt from the new pension proposal, according to the government's Information Department.

The strike would affect about 120,000 employees in the 12 free trade zones across Sri Lanka, which has been trying to attract major foreign investment since the end of the war through the state-run Board of Investment (BOI).

The 265 companies in the BOI-run free trade zones account for about 13 percent of the annual $8 billion in exports, and are primarily involved in garment production.

(Writing by Bryson Hull; Editing by Sanjeev Miglani)