Ukraine's leading English-language newspaper since 1995

WARSAW (Reuters) - Up to 10,000 workers, mostly from the arms industry, protested on Friday against looming lay-offs after Poland slashed its defence ministry's budget to save money during a steep economic slowdown.

The centre-right government recently reduced its defence budget by 2 billion zlotys ($534.7 million) as part of wider spending cuts, and military equipment producers say fewer orders will force them to cut jobs or even lead to bankruptcy.

"Due to the cuts at the defence ministry some 46,000 jobs are endangered, or even up to 100,000 indirectly," one speaker told demonstrators after they had marched to Prime Minister Donald Tusk's office in central Warsaw.

Poland's leading arms producer and exporter, Bumar Group, which brings together more than 20 companies and 12,000 workers, said recently it may be forced to lay off staff because of fewer orders from Poland's armed forces.

The government is in talks with the industry over its demands. However, some commentators say Poland's arms companies are inefficient and that it would be more economical to buy military equipment abroad.

In the northern Polish city of Gdansk, cradle of the Solidarity trade union which helped topple communism in 1989, around 3,000 workers of power producer Energa also staged protests on Friday against the firm's plans to cut jobs.

Poland's economy has grown strongly since it joined the European Union in 2004 but is expected to slow sharply this year as the global recession, especially in its main trade partners in western Europe, deepens.

Unemployment in Poland rose to 10.5 percent in January and officials say it could reach as high as 14 percent in 2010.