ATHENS – In a move that seems certain to stoke worker outrage just before a general strike and protests, Greece’s coalition government has reportedly agree to international lenders’ demands to fire 15,000 public workers this year and cut the minimum wage by 20 percent, from $986 a month to $788, leading to complaints from labor unions that it had reneged on promises to protect the workforce. Greece was also being told to cut private sector salaries by 20-25 percent but the government said it convinced the lenders to revoke that demand in return for cutting the minimum wage. Analysts warn that a big cut in minimum wage will have the same, or an even worse, effect on wages. Wage negotiations between employers and unions are traditionally held on the basis of the country’s minimum wage. Unemployment benefits are also set against the same standard.
But Vassilis Korkidis, head of the National Confederation of Greek Commerce (ESEE), said his group is not giving in. “We will fight to protect our businesses and the living standards of the Greek people,” he said in a statement. He also attacked the government for allegedly giving in to pressure from the country’s foreign creditors for further wage cuts and labor system reforms. “The red lines in the negotiations turned into red ribbons,” he said, mocking what the government said was a “red line” it would not cross, criticizing an apparent agreement to slash Greece’s minimum wage. New Democracy leader Antonis Samaras and George Karatzaferis, head of the far Right-Wing LAOS party that, along with holdover ministers of the former ruling PASOK Socialists, which comprise the coalition headed by former European Central Bank Vice-President Lucas Papademos as interim Prime Minister, had vowed to fight the pressure for Greece to buckle in return for keeping open a series of $152 billion in loans from the Troika of the European Union-International Monetary Fund-European Central Bank and a pending second bailout of $169 billion, as well as a write-down in Greek debt of at least 70 percent.
The Troika, however, said that came with the price of more austerity measures, although two years of pay cuts, waves of tax hikes, and slashed pensions have done little to slow Greece’s slide toward default or reduce its staggering $460 billion debt created by generations of PASOK and New Democracy Administrations packing public payrolls with political hires in return for votes – a prime reason for the crisis that Greece created, Troika officials said. Unless Greece gets additional aid, it will be unable to meet a March 20 loan repayment.
Papademos has failed to convince his coalition to accept the demands and has several times pushed back deadlines and convened another meeting for Feb. 6, angering Troika and EU officials who are demanding swifter action. The government’s change-of-heart on the firings and minimum wage, however, signaled a major shift in its stance, as pressure has intensified for Greece to implement even tougher reforms although the austerity measures have created a deep recession of 19.2 percent unemployment and closed 100,000 businesses. The coalition was caught between accepting more austerity and social unrest of the kind that have led to protests, riots and strikes, or refusing, which would almost certainly guarantee the end of international lifelines and leave the country broke and unable to pay its workers and pensioners. Karatzaferis had warned earlier that his party would not go along with the demands and that he would “not contribute to the explosion of a revolution due to a wretchedness that will then spread across Europe.”
Samaras said “They are asking for more recession than the country can take,” referring to Greece’s creditors in the European Union and the International Monetary Fund. “I am fighting against this,” but it was unclear whether both have also capitulated. The coalition was formed on Nov. 11, 2011 when PASOK Prime Minister George Papandreou resigned in the wake of protests and riots against the austerity measures he was ordered by the Troika to implement.
A 24-hour general strike is scheduled for Feb. 7 in downtown Athens, and the government decision to give in to the Troika has the potential to precipitate tension. Public Sector Reform Minister Dimitris Reppas said the job cuts would be carried out under a new law that allows such firings. ”We are opposed to indiscriminate firings,” Reppas said. “The work force reduction is strictly connected with the restructuring of services and organizations at each ministry.”
Officials at the Public Sector Reform Minister gave no details of the new plan, or said how many of the job cuts would be compulsory. Greece has promised to reduce its 750,000-strong broader public sector by 150,000 by the end of 2015, but has so far insisted it could reach that target through staff attrition. Talks are now said to be focusing on which sectors the government will enact cuts in to make savings worth 1.5 percent of Gross Domestic Product, or $3.93 billion that seems set to be made by cutting health care expenditures, although military salaries are reportedly exempt.