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GreekReporter.comGreek NewsEconomyIMF Proposes Structural Reforms for Greece Instead of Wage Cuts

IMF Proposes Structural Reforms for Greece Instead of Wage Cuts

IMFThe current internal devaluation process in Greece includes job cuts and shrinking of domestic demand rather than structural reforms which could increase productivity, noted the International Monetary Fund (IMF) on a new report analyzing the amount of responsibility that the northern European countries have in the situation.
The IMF said that Eurozone countries which have shown a deficit, have implemented painful external and internal adjustments following an internal devaluation strategy. The promotion of labor market reforms in Greece and other “deficient” economies in the Eurozone is very important but not necessarily through wage cuts because the release of salary reductions could accelerate the adaptability in the labor market and contribute to the reduction of unemployment, but decreasing income would affect the demand and return of “internal balance” in the southern countries of the Eurozone.
The IMF analysts suggested a reduction in taxes withheld from wages, and therefore an increase in net earnings, accompanied by an increase in consumption taxes.
Finally, according to the IMF report, further structural reforms in Greece could contribute in increased productivity and reallocation of employees in export industries. “There has only been ‘limited’ progress with reforms though, and while exports have rebounded, the manufacturing sector has remained smaller than before the crisis,” noted the analysts.

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