Greece passes third austerity package

Fri, Nov 9, 2012, 00:00

FOUR MONTHS after it took office, Greece’s coalition passed its first major political test in the early hours of yesterday when it pushed through parliament the country’s third austerity package after an unruly one-day debate in the 300-strong chamber.

The new austerity law, which runs into hundreds of pages but was voted on as one article, contains wage, pension and welfare cuts worth €13.5 billion – or 4.5 per cent of GDP – over the next two years, and an additional €5 billion worth of cutbacks for 2015-16.

It also dismantles much of Greece’s existing labour legislation, including increasing the retirement age by two years, effectively scrapping collective bargaining and making it easier for employers to hire and fire .

When the result of the open roll-call vote was announced, it showed that the government had only mustered the support of 153 of the 176 MPs of the three parties backing it.

The votes from the disparate “no” camp – leftist Syriza, the nationalist Independent Greeks, hardline Communists and fascist Golden Dawn – came to 127.

Democratic Left, the smallest coalition party, was responsible for much of the shortfall, with most of its 16 deputies voting “present” – akin to voting blank but not as serious as abstaining.

Amid raucous scenes, the debate was nearly halted twice. As business got under way Syriza and Independent Greeks called for a snap vote to declare the austerity bill unconstitutional (the country’s courts have said parts of it are) when most coalition MPs were elsewhere. That plan was thwarted when the speaker called a recess until the necessary number of government MPs could be found.

Later parliamentary staff threatened to pull the plug on the proceedings when the finance minister added a last-minute amendment stripping all 1,700 of them of their considerable privileges, such as generous monthly salaries paid out 16 times a year. At the core of the clientelist system, the backlash from the staffers – mostly relatives or friends of ministers, past and present – was enough to force the short-lived amendment to be withdrawn.


Immediately after the vote, the leaders of the two main coalition parties – conservative New Democracy and socialist Pasok – announced the expulsion of renegade MPs from the benches of their respective parliamentary parties.

New Democracy’s loss of one MP was barely noticed; Pasok’s ejection of six deputies – another declared he would sit as an Independent the following morning – laid bare the rifts within the once dominant party.

The question is whether its embattled leader, former finance minister Evangelos Venizelos, can keep the party going until a planned refounding congress in the spring.

Wednesday’s parliamentary vote made clear is that the government underwent a test of party discipline and necessity but not of conviction. Few of MPs who spoke in favour of the legislation seemed convinced the measures would lead Greece out of the crisis, a view shared by a 100,000-strong crowd that protested outside as the debate came to a close.

One Pasok MP, Theodora Tzakri, summed up the dilemma when said she was voting “with a gun to my head”. The prime minister, Antonis Samaras, was more upbeat, telling reporters that the vote was a “major, decisive and optimistic step towards recovery”.


However, the real test will be in implementation of the package, which is certain to generate stiff resistance from citizens already reeling from the effects of austerity.

Unemployment is rising steadily, crossing the psychologically significant 25 per cent threshold in figures released yesterday.

Experts predict that registered unemployment will climb to 29 per cent next year, masking an actual jobless rate of 34-35 per cent.

“After Christmas the impact on citizens will be very painful. As it stands many cannot afford home-heating oil, are unable to pay the special property tax or income levy, and have had their salaries cut.

They are certain to react, but it remains to be seen how they will do this,” said George Tzogopoulos, an analyst at the Eliamep think tank.

Austerity plan

The package will include:

Retirement age increased from 65 to 67 from January 1st

Pensioners and public servants to lose bonus of two extra monthly payments at Christmas, Easter, summer

Public utility employee pay slashed by 30-35%

Cut of 5-15% on pensions above €1,000

Special salaries paid to army, police, judiciary, professors, bishops and state doctors cut by 2-30%

Cap on severance pay and reduction of workplace notice

Minimum monthly wage of €580 (€511 for under 25s) frozen until 2016

Deregulation of taxi, haulier and other closed professions

Disability, child and unemployment benefit linked to family income