MAHALLA EL-KOBRA, Egypt, (AP) – The Egyptian government is trying to rein in the biggest spate of labor unrest the country has seen in decades after thousands of workers at a textile mill went on strike to protest low wages and soaring inflation.

The government recently rushed to resolve the strike of 27,000 workers at the Misr Spinning and Weaving Factory in this gritty industrial city, a sign of authorities’ unease over the increasing unrest among Egypt’s working class.

But the underlying causes of the series of strikes over the past year remain: The poor feel squeezed out of Egypt’s liberalizing economy, and their frustration could pose an even greater threat to stability than the government’s traditional political rivals like the Muslim Brotherhood.

The World Bank last week ranked Egypt as the world’s most improved economy for investors in 2007, thanks to the new government’s wide-ranging economic reforms. The country has seen an average growth rate of 7 percent for last three years, double what it was previously.

But even government officials have acknowledged in recent months that the improving economy has not trickled down to the majority of people in this country of nearly 77 million. Inflation has soared to 12 percent since December, up from a low of 3.4 percent just a year before. Though the government says it fell to 8 percent last month, independent economists put the real rate at about twice that.

The result has been the biggest wave of strikes since the 1950s, said Joel Benin, the head of the Middle East Studies department at the American University in Cairo. At least 200 instances of labor unrest took place in 2006, according to the Center for Trade and Union Services, a pro-labor non-governmental organization.

With most of the population apathetic and the opposition fragmented, Egypt’s hundreds of thousands of public sector workers are an organized and motivated group that, if aroused, could pose a severe threat to the Egyptian government.

“It seems like the decision is to pacify the workers and give them what they want and crack down on the intellectuals and not give them anything,” Benin said. “The workers are more of a threat.”

The government and the striking workers in Mahalla el-Kobra announced their deal Saturday ending the strike after officials agreed to demands for three months’ worth of profit-sharing bonuses.

Though the workers returned to the factory Monday, the unrest may not be over. The Mahalla workers struck in December for similar reasons, and even after that was resolved, a series of other factories launched their own walkouts.

“It’s going to cost them more than what they (the government) are just giving the Mahalla workers,” Benin said, suggesting other workers will follow suit.

So far, the government has taken a relatively soft hand toward the workers, generally holding back from security crackdowns on their noisy protests and giving in to at least some demands. That is a sharp contrast to the reaction to most political protests, which are often heavily put down by security forces.

“They are afraid that a violent crackdown as they did in the past would increase tension in Egyptian society,” said Kamal Abbas, executive director of the Center for Trade and Union Services. “They also don’t want to look bad to international investors and need to show they are containing the situation.”

But the government shut down CTUS in April, accusing it of fomenting labor unrest. On Monday, a criminal court sentenced Abbas and a lawyer to one year in prison on charges of libeling and insulting a ruling National Democratic Party member.

The government has also accused the Muslim Brotherhood and other political parties of pushing the workers to strike to cause instability, an accusation the groups deny.

As do the workers. “No political groups are involved,” said Gihad Taman, one of the leaders of the past week’s strike in Mahalla.

“What sparked the latest strike is the increase in prices a month after the first strike (in December). … The workers have no other goals than to just earn a living and feed their children. We tell the government, ‘Take what you what, just give me and my family the essentials of life — food, shelter and an education,'” Taman said.

During the strike last week, thousands of the workers gathered for days in a sit-in, beating plastic barrels like drums and shouting slogans. The women workers expertly listed the price increases for basic staples over the last few months, with the price of about two pounds of pasta alone doubling 4 Egyptian pounds (70 U.S. cents).

Ibrhaim Zeidan, 29, a 10-year veteran of the factory, showed his monthly pay stub showing his take home pay of 242 Egyptian pounds ($43). Like many of his co-workers, he has taken a second job to make ends meet.

“We all work outside. If I didn’t then I wouldn’t eat,” he said.