The uneasy coalition government of Prime Minister Antonis Samaras will hit workers, pensioners and the poor for a big chunk of the $14.16 billion in cuts demanded by international lenders in return for rescue loans, Greek media reports said. Some 34,000 civil servants will be laid off at a percentage of their already-reduced salary for one to two years, and then fired.
The government led by Samaras’ New Democracy Conservatives and his rivals, the PASOK Socialists of Evangelos Venizelos and the Democratic Left of Fotis Kouvelis, has to finalize the last $862 million in savings before presenting the package to the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB.) Greece is surviving on a first series of $152 billion in rescue loans and awaiting a second bailout, for $173 billion, that is being withheld until the government agrees on the cuts. The Troika also wants 150,000 workers let go from public payrolls.
The newspaper Kathimerini said that Venizelos and Kouvelis have given on and will no longer oppose “horizontal cuts,” and now support more cuts of 2-15 percent in pensions and welfare benefits instead of asking the ECB to take losses on his Greek bond holdings, what investors call a haircut. A former government imposed 74 percent losses on private investors when Venizelos was finance minister, to write down the country’s debt by $134 billion, but that effectively locked Greece out of the markets and dependent on public aid.
Some social payments will be reduced and others scrapped and the government will introduce stricter income and assets criteria for those who will be eligible for benefits in the future. Venizelos previously lowered the tax threshold so those on the poverty line were being taxed for the first time, and instead of tax refunds, many Greeks now have to pay an additional tax on their income as well as a third income tax.
The trio of leaders has to be unanimous before presenting the Parliament they control with the package that is expected to pass easily as opponents do not have enough votes to veto it and the party leaders traditionally expel anyone who defies them.
Retirement pay below 700 euros ($862) per month will not be affected. Supplementary pensions, however, are to be slashed by up to 35 percent, although they have already been completely eliminated for about 85,000 elderly who depend on the monies. This would be the fourth cut to pensions since 2010, when Greece signed up to the EU-IMF bailout. Pensions have been reduced by up to 40 percent since then as Greece has continued to let tax evaders who owe $70 billion largely escape sacrifice or prosecution.
More cuts are also coming for public workers who’ve already seen their pay reduced by about 30 percent and reductions of 30-35 percent at state enterprises, known as DEKO’s, where workers enjoy much higher salaries, are being readied, Kathimerini said. DEKO employees are paid an average of $38,180 annually – twice that of a veteran schoolteacher – but are expected to be cut to $28,870 in a bid to save $308 million. The annual two months holiday and summer bonuses, that have already been cut 30-80 percent, will be phased out completely under the government plan.
Labor unions have already promised more of the same kind of protests and strikes – that sometimes turned into riots – that brought down the former government of then-PASOK leder George Papandreou in November of 2011.
The government hopes to finalize the new austerity measures before Samaras meets German Chancellor Angela Merkel and French President Francois Hollande later this week. He is expected to make the case that Greece needs more time to meet the fiscal targets and impose new measures but there are no signs he will get it.
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