Workers to Resist Greek Austerity Measures

Arthi Gupta
30 Apr, 2010
New York City

European investors surmised that Greece and the EU-IMF will soon finalize the details of bailout. The euro and stock market indexes in the region advanced. However, Greece may be forced to implement additional and tougher austerity measures.

[R]3:45 PM Frankfurt – European investors surmised that Greece and the EU-IMF will soon finalize the details of bailout. The euro and stock market indexes in the region advanced. However, Greece may be forced to implement additional and tougher austerity measures.[/R]

Greece and the EU-IMF negotiations may end as early as today with the release of emergency aid as early as next week. European Union politicians and regulators are worried of a wider contagion that has already affected bond prices of Spain, Portugal and Ireland.

Greek government is in the final stage of negotiations with EU and the IMF has agreed to freeze wages for three years and eliminate two of the fourteen annual salary payment and in all cut 24 billion euros or $32 billion in spending. Service workers union ADEDY is resisting cuts and asking its members to protest tomorrow instead of celebrating Labor Day.

Greece’s Prime Minister George Papandreou may struggle to implement tough austerity measures that are resisted by workers unions. Papandreou was elected in October on the pledge to increase wages of union workers but is now forced to cut wages and spending and raise taxes.

Kathimerini newspaper reported that the government will increase sales tax and allow businesses to fire 4% of the staff from 2% and also implement wage freeze as early as next month.

Greek labor unions have called for more strikes and street protest is the government implements tougher measures to bring down the deficit in line with the EU mandate. The government is asked to lower the deficit by ten percentage points in the next two years.

The strict measures will lower the deficit from the deficit in 2009 of nearly 13% to 3%.

However, stock markets in Athens and EU region traded higher on the optimistic note that Greece will soon receive 24 billion euros. The ASE index soared 7% yesterday and added another 0.9% today.

The euro traded higher 0.55% to $1.331 on the optimism that Greece will receive the financial assistance as early as next week and Greek bonds yields declined to 9.07% from record 11.41% two days ago.