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Europe

Unions strike against government austerity plan

Text by News Wires

Latest update : 2009-12-17

Unions are protesting across Greece against government austerity measures aimed at stabilising the country's debt-ridden economy and restoring investor confidence.

AFP- Greece's crisis-hit government faced a strike call on Wednesday from Communist-led unions challenging austerity measures aimed at saving the debt-ridden economy and restoring financial credibility.
   
Unions said they plan strikes and demonstrations in dozens of Greek cities on Thursday against the cost-cutting plans unveiled by the Socialist government under pressure from sceptical financial markets and the European Union.
   
Meanwhile Finance Minister George Papaconstantinou, who is visiting Germany, France and Britain in the hope of getting backing, insisted that Greece would do "what it takes" to regain international trust.
   
"Successive (Greek) governments have said things that haven’t happened," he told the Financial Times in an interview on Wednesday.
   
"Credibility takes time to build and the window of opportunity is very small," Papaconstantinou said. "The truth is you can say things but there is not much you can do immediately."
   
The government has attempted to strike a delicate balance between sceptical European peers and the markets on the one hand, and unions on the other.
   
Prime Minister George Papandreou has repeatedly insisted that the Socialists will not cut wages and will protect poorer citizens but hardline Communist-led unions have rejected a "social dialogue" initiated by the government.
   
"The new government measures aim to completely overturn (our) rights," the Athens journalists' union, which is backing Thursday's action with a 24-hour strike,  said in a statement.
   
School teachers, state hospital doctors and dockworkers are also expected to walk off the job but the two main unions representing workers and civil servants have so far failed to support Thursday's industrial action.
   
"Social partners have so far adopted a quite accommodating position but this risks changing once the real impact of the measures is felt," a European bank manager told AFP on condition of anonymity.
   
Papandreou, whose Socialists came to office in a snap election two months ago, is under intense pressure to honour pre-election pledges to salvage an ailing economy while reducing a massive national debt of 300 billion euros (438 billion dollars).
   
"There will be reaction," Papandreou told the BBC on Wednesday.
   
"But there will be a wide majority in this country which will be supporting this and that gives me the determination, the real political will and the strength to carry through these reforms," he said.
   
Part of Papandreou's strategy calls for trimming bureaucracy levels that could endanger civil servant jobs.
   
On Monday, Papandreou promised curbs on public sector hiring and pay, a 10-percent cut in civil servant benefits and a reduction in military spending.
   
He also called for a 90-percent tax on bonuses at banks and an overhaul of the fiscal system in measures due to come into force from early 2010.
   
But Papandreou's announcement left both markets and the European Commission wanting more, with the bloc's top economic enforcer Joaquin Almunia saying the EU awaited "concrete measures that will strengthen fiscal adjustment in 2010 and ensure a fast consolidation of public finances."
   
Greece's public deficit is likely to rise to 12.7 percent of output this year, far exceeding the eurozone limit of 3.0 percent.
   
The country suffered a downgrade to its credit rating last week that troubled markets and raised fears for the solvency of other indebted eurozone members.
   
The yield difference, or spread, between Greek and German government bonds has shot up, meaning that Athens needs to offer higher interest rates to attract fresh loans.
   
Greece has, however, managed to sell two billion euros' worth of five-year notes to cover early January spending needs, the finance ministry said Wednesday.
   
"We think that volatility of Greek spreads is likely to persist until the government effectively implements measures," BNP Paribas said in a note to investors.
   
But the bank expressed the view that a Greek default "is not the most likely scenario" given the support likely from Greece's European partners anxious to avoid a potentially fatal blow to the euro currency zone.
   
The Athens stock exchange on Wednesday opened with a 0.26-percent drop and slid further to losses of 0.51 percent in the afternoon.

Date created : 2009-12-17

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