ATHENS (Reuters) – Greek seamen last Thursday called a strike this week after the government said it would lift restrictions on foreign cruise ships in a first step towards liberalising the country's labour market.

Prime Minister George Papandreou said last Wednesday the Mediterranean country would allow non-EU flagged cruise ships to moor at its ports and travel across the Greek islands as of this summer.

Policies had previously restricted shipping companies to hiring Greek-only crews. Greek seamen said they would walk off the job for 24 hours on April 26, saying the change would lead to unemployment in their sector.

"Lifting cabotage restrictions in cruise shipping means job losses," the Panhellenic Seamen Federation said in a statement. "This strike is only our first answer to the attack against Greek seafarers."

The strike is expected to disrupt passenger ship traffic.

Papandreou said he understood sailors' concerns but opening Greece's sea to other countries' flags would increase hotel revenues and jobs in the tourism sector.

"We've lost valuable ground in the radical growth of international cruise shipping. We've disdained our strategic advantage, which is our strategic position in the eastern Mediterranean," Papandreou told a tourism conference.

Tourism accounts for a fifth of Greece's 240-billion-euro economic output and is the main driver of its economy, which is in recession for the first time in 16 years.

Greece's budget gap last year was worse than feared, the European Union's statistics office revealed last Thursday, as Moody's Investors Service downgraded its rating of Greek government debt.