Greece’s two-party government was expected last night to pass its first major political test since the departure of a third coalition partner last month, by passing another package of lender-mandated austerity in return for a cash injection from its massive bailout loan.
Against a backdrop of a muted general strike on Tuesday, street protests, closed council offices and parliamentary opposition, the country’s MPs spent two days debating, often acrimoniously, an austerity package that will see, for the first time, public servants fired from their positions.
Although a number of government backbenchers had expressed reservations about the package, in particular the taboo of public sector layoffs, coalition leaders were confident their five-seat majority would see the Bill through.
Using a tactic deployed by his predecessors, prime minister Antonis Samaras on Sunday flatly denied that more austerity measures would be taken in the autumn, but warned the country had to achieve a primary surplus to guarantee continued support from its European partners.
15,000 fired
Last night's Bill obliges the government to fire 15,000 public employees by the end of 2014 and select 12,500 for involuntary transfer to other jobs this year in return for a €6.8 billion payout from a €240 billion bailout fund.
Earmarked for transfer are 2,200 school janitors, 3,500 members of the country’s municipal police, which will be disbanded and most of its members absorbed into the regular police, at least 2,000 local government employees, 1,500 teachers and some employees of other ministries. They will be suspended on 75 per cent pay. If they refuse to take or find another job in the public sector, they will be subject to dismissal.
A number of last-minute changes to the Bill – which included the curious provision to exclude from transfer janitors and municipal police with postgraduate degrees – were not enough to defuse the opposition of mayors and unions, who say that local government is already critically understaffed following the dismissal of contract workers.
VAT cut
Earlier in the day, Mr Samaras announced he was reducing VAT in the food service sector from the beginning of next month, from its current 23 per cent to 13 per cent. In a televised address, he presented it as the first major tax concession by the country's troika, but warned it he would reverse it if business owners failed to issue receipts to customers.
The announcement was overshadowed by an embarrassing gaffe when television stations broadcast an unedited, bungled recording in which Mr Samaras could be heard muttering expletives off-screen after stumbling on his words.
With Germany’s finance minister expected in Athens today, Mr Samaras will be hoping to demonstrate his political resolve to Wolfgang Schäuble, who will be offering up to €100 million to a support fund for small and medium Greek businesses, an offer conditional on Athens fulfilling certain, still unspecified conditions.
Police declared a ban on all protests and gatherings within a large swath of Athens city centre today.
