Greek Cabinet Meets to Finalize Deep Budget Cuts

Greek Prime Minister Antonis Samaras’ Cabinet met on Aug. 31 to rubber stamp more than $14.7 billion in cuts demanded by international lenders in return for continued aid, with salaries and pensions again at the top of the list amid speculation there could be as much as another $2.3 billion in cuts coming.
The budget for 2013-14 will end the annual two months holiday bonuses given workers at Easter, summer and Christmas, which is bad news for retailers with the holidays a few months off as some 68,000 have already closed because of previous austerity measures. Already battered by big pay cuts, tax hikes and slashed pensions, Greeks will now face increases for public transportation as well.
The plan is expected to get its final okay on Sept. 3, two days before inspectors from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) return to Athens to check progress on reforms. The Troika will decide whether it is satisfied before releasing a last loan installment, of $38.8 billion, from a first bailout of $152 billion in rescue loans next month, and a pending second package of $173 billion, without which Greece will go broke.
Samaras, going against his campaign pledge ahead of the June 17 elections not to impose more burdens on Greeks, had to convince the partners in his uneasy coalition, the PASOK Socialists and Democratic Left, who had objected to some measures, particularly pension cuts, but they relented too, media reports said. Samaras said the deeper-than-expected cuts were necessary because the austerity measures he and PASOK backed had worsened a five-year-recession that has put nearly two million people out of work and shrunk the economy by 7 percent.
The measures reported include a $4.4 billion cut to pensions, health cuts of $1.84 billion, and a $649.5 reduction in defense spending. ”This list did not come from us,” a Finance Ministry source told the newspaper Kathimerini, declining to comment on the figures. Under the package, public-sector wage expenditure will be cut by $4.14 billion by slashing 12 percent from so-called “special salaries” for categories such as uniformed officers, judges, diplomats and academics, and eliminating what’s left of the holiday bonuses that had already been cut up to 68 percent. A unified pay scale for all civil servants will be introduced a year earlier than planned, which will result in $150.7 million in savings.
Cutting the salaries of 68,000 employees in public utilities companies, known as DEKO, by 30 percent will result in $344.2 million in savings over the next two years, along with a reduction in state subsidies to these companies, but are likely to be met with fierce resistance. There are also plans to lay off 30-35,000 public workers at further reduced pay for an undetermined time and then firing them. The Troika wants 150,000 gone. A freeze on all promotions in the military and police will save $207.3 million. Savings are also planned from cutting the monthly bonus benefits enjoyed by department heads in ministries – which currently range from $314-$1,130, larger than most workers salaries.
Samaras said the cuts would be the last and insisted that the sacrifices were ”inevitable” to keep the country in the Eurozone. ”Without them, the country would return to zero credibility and, in essence, would exit the Eurozone,” he told members of his New Democracy Conservative party.
Samaras will likely need to confer with his coalition partners again next week to finalize the cuts, which unions and the major opposition party, the Coalition of the Radical Left (SYRIZA) have pledged to resist with more of the strikes and protests – that often turned to riots – and brought down the former government of then PASOK leader George Papandreou.
(Sources: Kathimerini, Reuters, Athens News)