* Czechs strike in rare labour action
* PM says will not back off, ready to take unpopular steps
(Adds union leader, protester, number of participants)
By Roman Gazdik and Robert Mueller
PRAGUE, Dec 8 (Reuters) - Czech public sector workers went on strike on Wednesday against the government's plans to cut the sector's wage bill by 10 percent as part of its austerity drive.
Union leader Jaroslav Zavadil said 123,000 workers in state administration, schools and hospitals joined the strike, out of about 600,000 public sector employees. Some government offices and schools were closed.
Thousands of workers also marched in cities across the Central European country of 10.5 million, although the rally in Prague drew only about 1,000 people, according to police estimates.
The Czech Republic's debt is under 40 percent of gross domestic product, about half of the EU average but is expected to rise without reforms. The government wants to cut the public sector deficit to 4.6 percent of gross domestic product from 5.1 percent expected this year.
The unions have warned they could call a general strike if the government refuses to change its plans. The last general strike was in 1989, when millions of Czechs walked out to protest against the Communist government, one of the decisive moments in the collapse of communist rule in the country.
"No wise government would do what this one did, to alienate this group of people, which is, in most countries, loyal to the government," Zavadil, leader of an umbrella union grouping, told the Prague rally. "They made you their enemies."
An opinion poll at the weekend the strike had the backing of 60 percent of Czechs. Economists have said they do not expect the strike to have a big economic impact.
GOVERNMENT UNMOVED
A wave of labour protest has swept through Europe as governments slash spending to calm markets and narrow budget deficits inflated by the economic crisis.
The Czech cabinet, elected on a programme of cutting the budget deficit below 3 percent by 2013 and reforming the pension, health and welfare systems, refused to climb down on the wage plan.
"We did not win our mandate to sit and wait until clerks from international institutions start putting our public sector finances in order, as is happening in some EU countries," Prime Minister Petr Necas said on Tuesday.
"We are not afraid of unpopular steps, we are ready to make them."
Hana Vlckova, a 60-year-old pensioner, said the government was taxing the poor instead of the rich to fix the budget.
"I am not detached from what is going on, I feel sorry for our children," she said at the Prague rally.
"My happiness depends on society taking care of people who cannot care for themselves. That is what I paid taxes for."
Walkouts are very rare in the Czech Republic, where union membership has shrunk to about 600,000 of 4 million workers. (Writing by Jan Lopatka; Editing by Alison Williams)