Workers and unions braced for savage cuts package

Industrial war is likely to wage around the ending of bonuses and more tax hikes, writes JOHN PSAROPOULOSin Athens

GREEK UNIONS are planning more strikes and protests in reaction to a new austerity package widely expected to be announced this weekend.

It is thought that a package of austerity measures would be a condition for the activation of the €45 billion financial aid package lined up by the euro zone and the International Monetary Fund. Representatives of the IMF and EU left Athens yesterday after a few days of consultations with the government.

Local media have reported a series of draconian measures said to be included in the package. Among them is the complete severance of Easter, summer and Christmas bonuses in the public sector, amounting to two extra monthly salaries a year.

The government had already trimmed these by 30 per cent in the last austerity package, announced in early March. Their removal would be a historic irony, as they, along with much of the welfare state, were introduced in the early 1980s by then prime minister Andreas Papandreou, father of current prime minister George Papandreou.

There could be more public sector pain in a further reduction in above-salary benefits. These are awarded for rank, length of service, educational level and children, among other things, and can as much as double nominal salary.

The government already trimmed benefits by 10 per cent this year, giving rise to four one-day strikes in the civil service.

Also allegedly planned is the abolition of Easter, summer and Christmas pension bonuses in both the public and the private sectors, since the state underwrites pension funds in both.

A further hike in VAT could be on the cards, despite a 1-2 point rise earlier in the year that has now begun to come through in retail prices and utility bills. Indirect taxes, though unfair on the poor, are attractive for the government because Greeks are notorious evaders of direct taxation.

Greek governments raise only about €2.5 billion a year through direct taxation on individual income, compared with tens of billions from VAT.

Labour reaction has been mixed. Union leaders, who discussed the measures with Mr Papandreou yesterday, described them in the darkest terms. They were the most savage, unprovoked and unjust assault, said civil servants’ union leader Spyros Papaspyros, saying the measures would render salaried employees, pensioners and the unemployed wretched.

The head of the largest private sector union group, the General Confederation of Labour (GSEE), said its answer would be delivered on the streets.

The head of the Greek Economic and Social Committee, a former head of GSEE, said the measures were tough but would have to be fought through.

Organised labour is polarising opinion through what some see as its excesses. On Wednesday, a group of communist party activists and passenger shipping union members harassed passengers attempting to board their cruise ship, the Zenith, in Piraeus harbour. In response, the ship’s operator, Spanish-based Pullmantur cruises, announced it would withdraw the ship from Greek waters.

The Association of Greek Tourism Enterprises estimated the loss at €10 million and 400 jobs this year. Tourism is Greece’s biggest industry, amounting to 20 per cent of GDP.

Yet strikes are set to intensify in the short term. A number of labour groups will strike on May Day, and journalists are walking off the job next Wednesday.