With their pay set to be deeply cut, 45 veteran workers at the Bank of Greece have resigned en masse, illustrating the deep division in the country as the Parliament was set to vote on a $17.45 billion spending cut and tax hike package that would slash workers’ salaries across the board and whittle away labor rights.
The Financial Times reported that the bank employees are seeking early retirement because monthly salaries at the bank would be capped at 5,000 euros ($6,383) before taxes, reducing the monthly take home pay of some of them to as little as 2,900 euros ($3,702) a bank official confirmed. While that pay is far above what most Greeks earn, it’s a fraction of what top bankers can earn in other European countries and the United States.
The move shocked the venerable institution which has been mostly exempted from the country’s five-year recession and crushing economic crisis, even though the governor and his deputy voluntarily took a 50 per cent salary cut this year, while other employees took a 17 per cent cut.
“Because the bank is listed on the Athens stock exchange, it counts as a public sector corporation according to the new legislation … our employees are therefore liable for the salary cap,” the same official said. Five senior Bank of Greece officials, including the Director of Banking Supervision, were among the group who quit, he added.
Salary and pension cuts will account for 5.8 billion euros ($7.4 billion) out of 9.4 billion euros ($12 billion) in projected spending cuts next year under Greece’s latest deal with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which is putting up $325 billion in two bailouts.
“Successive rounds of austerity are starting to dissolve the middle class,” Vassilis Korkides, President of the Greek traders’ federation, an umbrella organization for family-owned businesses, told the Financial Times. “This constant economic and psychological hammering is having a disastrous effect on the most dynamic sector of society,” he said.
If the measures go through, some 70,000 employees of public sector corporations, including utilities, Greece’s two biggest ports and OPAP, the state gaming organization – all due to be privatized – will see their salaries slashed by an average 35 per cent, while annual benefits, equivalent at some companies to an extra three months’ salaries, will be eliminated.
Their job security will also disappear as soon as companies are acquired by strategic investors, as the state has transferred all its shares in public corporations to TAIPED, the privatization agency, without imposing any conditions on potential buyers, a finance ministry official said.
Judges, university professors, doctors at state hospitals, army and police officers all face salary cuts of 10-25 per cent on incomes already reduced 25-30 per cent by several previous rounds of austerity. Local government officials will suffer the biggest reduction, with mayors’ salaries to be slashed by 50 per cent.
The full scale of the cuts was only revealed this week when the 500-page package was presented to Parliament. “This is becoming a frightening situation… Greece is now taking the kind of pain that other countries in the region suffered 20 years ago with the demise of communism,” Pericles Anagnostopoulos, a retired teacher, told the Financial Times. Higher pensions will be cut by a bigger percentage, but the largest category of savings will come from a 5 per cent reduction in pensions below 1,500 euros ($1,914) monthly.