Mass cuts in salaries and pensions and increased VAT in Greece – this is the prerequisite in order to receive financial support from the EU and IMF, which probably will amount to €140 billion. The dragon measures will save resources in the amount of 10% of GDP per year and will achieve the objective for the fall of deficit to 3%.
Finance Minister George Papakonstantinou has been ordered to fight on two fronts until the last possible moment: to save the 14th salary in the private sector and the 13th salary in the public sector. In return, the government proposed to the EU and IMF representatives to implement immediately reforms on the pension system, which would have began in 2018, but now it was agreed they will start in 2013. The government will announce the final decisions on Sunday and on Monday and will immediately submit them for emergency voting in the parliament.
Unless urgent measures are taken, public debt will reach 145 percent of GDP, said Prime Minister George Papandreou. If the measures are implemented immediately, Greece might not have to use the whole package of financial aid and return to the markets as a winner.
Danger laying in the implementation of reforms is that they could lead to inflation, unemployment and ultimately an increase in public debt. Public anger has also reached alarming proportions and may create a panic that will destabilize the banking system, said Ethnos newspaper.
The measures cause dismay among senior cadres of the ruling party, who realize that the moment they are announced, nothing will be the same in the country and in their party. Their fear is not associated with loss of the next election, but with the release of energies that can lead to the creation of new party factions, as the existing will assume responsibility for the bankruptcy and will be threatened by falling apart.
The question that worries PASOK is whether they could have taken a different route, having won the elections on October 4. But Finance Minister George Papakonstantinou said that Europe has asked for a restart (start over): "We have to get poorer, so you can start a new beginning," the minister said.
"It seems that the three want to revive the country after incineration," said one of the unionists, who met with Mr. Papandreou yesterday. The Greek PM requested the support of unionists to prevent people from social unrest. Present at the meeting with Mr. Papandreou were trade union representatives from the private and public sectors. The Prime Minister informed them of the EU and IMF demands from Greece and stressed that they should be met immediately in order to reduce the government deficit in the next two years. In this regard, part of the reforms that Greece should begin immediately are:
- To freeze wages in the public and private sectors for three years.
- To cut the 13th and 14th salary of civil servants
- To cut the 13th and 14th salaries of private employees, but according to the Government this question remains open
- To eliminate Easter and Christmas bonuses and allowances granted to pensioners in the public and private sectors. Within this framework, the government is trying to apply the measure for pensioners who receive more than €700 per month.
- Freezing of collective labor contracts
- Implementation of urgent reforms in the pension insurance scheme and immediately to equalize the retirement age limits between women and men in the public sector
The beginning of the riots against the measures begin tomorrow on May 1 with the slogan "The crisis should be paid by those who have the money" and "Together we can." Union members are organizing rallies, which will be held at Klavtmonos Square at 11:00AM and Syntagma Square. The next general 24-hour strike is planned for May 5 with a new protest demonstration at 11:00AM on Pedio Areos and Omonia Squares.