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Weak rally against 2011 budget

23 December 2010 / 10:12:16  GRReporter
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Weak was the protest held by the Greek unions outside the parliament building in the capital, while inside the National Assembly was running the last discussions before the final adoption of the 2011 budget. Finally, it was adopted by the votes of all PASOK’s 156 deputies. Representatives of the Union of Civil Servants and of the Union of the employees in the private sector had gathered on Syntagma Square in Athens and half a kilometer further down near the National Library there was another rally of the supporters of the communist trade union PAME.

Representatives of public transport employees, the electricity company, bank officials and public sector employees gathered at the protest rally under the slogan: "We will not obey!" Not more than a thousand people were protesting, shouting the familiar slogans: "Thieves, cheats" and "Give the money back!"

The main reason for the protest is the plan of George Papandreou’s government to reform the public sector and especially loss-making state enterprises. The focus falls on the public transport companies, state railway company, the national post and the Greek electricity company. The 2011 budget includes 800 million euros revenues from privatization and restructuring of state companies. According to economic experts from the country and abroad, the public administration in Greece is extremely cumbersome, inefficient and mostly it is financially beyond the abilities of the ordinary taxpayer. A detailed study of costs in state-owned enterprises showed that 54 of them have been operating at a loss for years and their maintenance costs billions of euros per year.

In the last days of 2010 the Finance Minister George Papaconstantinou sent a letter to the management of the largest state enterprises, requesting at least 10% reduction in salary costs for next the year. The measure is necessary to prevent more extensive cuts in employees. The letter states that wages in public enterprises should be harmonized with those in the rest of the economy given the critical situation in the country.

Meanwhile, the annual report of the Institute for Economic and Industrial Research was announced which defined the measures of the Socialist government's fiscal consolidation and reorganization of the Greek economy as necessary but insufficient. The economic analysts proposed the government to pay more attention to reducing public expenditure along with the budgeted measures. They called for merger of hospitals and clinics and privatization of those of insufficient state funding. Merger or even closure of military units is also a solution that will save money for the public sector.

They are adamant from the Institute that tax breaks for individuals should be eliminated. The proposal comes at a time when the Finance Minister George Papaconstantinou wants to release a number of citizens from their tax liabilities amounting to 24 million euros under the pretext that they are bad. The introduction of a single electronic system for business reporting and control (business intelligence system) will significantly improve the outcome in the fight against tax crime and will increase revenue to the treasury. The law on social security recasting will also be unavoidable. According to the Institute, a second pillar should be included to cover additional health and pension insurance by accumulating reserves for future periods and its funding will not be used entirely to cover current pensions.

Streamlining and legislation simplification are also important for a more rapid exit from the crisis but the issues about solving the problems of lack of transparency, corruption and low competitiveness are assessed as much more critical. According to analysts, Greece must use the time for fiscal consolidation through the Memorandum of financial support to radically reform its economy. Policies and actions related to innovation, green economy and improving the justice system are also an essential part of the measures that will give positive effect in the long term but are not sufficiently involved in the action plan of the socialist government.

While the government of PASOK is fighting with trade unions and opposition to pass the measures for fiscal consolidation over the next year a new row of Greek flavour is coming along in Europe. Bloomberg decided to press charges against the European Central Bank for concealing information relating to Greek swap transactions in 2001, which added another 5.3 billion euros to the country's obligations. The financial experts are suspicious that Greece has managed to hide the actual amount of its foreign debt through derivatives of the recent past and the European Central Bank turned a blind eye to this fact.

Bloomberg wanted to publish the documents relating to the infamous swap transactions of the Greek government a month ago but the president of the European Central Bank Jean Claude Trichet refused to submit the required information. He rejected the request, stating that disclosure of details about the transactions at issue could cause turmoil on international markets and mislead investors. In response, Bloomberg turned to the European Court in Luxembourg to resolve the problem.

Tags: EconomyMarketsSocietyCrisisGreeceECBBloombergStrikesTrade unions2011 budget
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