Peru's doctors end long strike after Humala grants pay hike

The deal was a victory for public sector workers, who have complained about stagnant pay despite Peru's widening fiscal surplus, which swelled to 7 percent of gross domestic product in the first half of this year.

It was the first pay increase for doctors in a decade, a period in which Peru's economy has surged about 6 percent a year.

Cesar Palomino, the head of the doctors' union, said that while Humala's cabinet dismissed the demands of 11,000 striking doctors, the president of congress, Victor Isla, assigned funding to increase their pay - helping the public health workers "twist the arm" of the executive branch.

"I am convinced that without the strike we wouldn't have this deal," said Palomino. "Victor Isla and different political parties applied critical political pressure."

Isla, a member of Humala's ruling Gana Peru party, wasn't available to comment on Monday.

Humala's influential finance minister, Luis Castilla, a Wall Street favourite, has been criticized by both doctors and teachers for resisting pay increases.

Humala has yet to negotiate a long-term deal with teachers, who were lured back to work last week with a one-time bonus of 300 soles (72 pounds) after a month of picketing.

The doctors' agreement includes a monthly raise of at least 1,500 soles starting in July and two bonuses of 3,500 soles before then.

They earn, on average, less than 2,600 a month now.

The deal, struck after hundreds of hospital administrators in the national health system resigned last week in a show of solidarity, will also move doctors who had been contractors into staff jobs.

Though the budget impact has not been made public, the pay hike will likely increase government expenditures and may also prove to be politically costly. Hundreds of voters were turned away from hospitals during the strike and many people couldn't send their kids to shuttered schools.

The strikes also put pressure on Humala's cabinet chief, Prime Minister Juan Jimenez, who struggled to resolve the walkouts and then, on Sunday, blamed the opposition APRA party for starting them.

"There is apparently a political thrust behind all of this," he said on Frecuencia Latina TV. "The length of the doctors' strike was absolutely unjustified."

Palomino dismissed that as "disinformation." Jimenez, appointed in July as Humala's third prime minister in his first year in office, has an approval rating of 18 percent, according to an Ipsos October poll. Humala's approval rating has hovered around 40 percent for four months.

(Reporting by Mitra Taj; Editing by Terry Wade and Todd Eastham)