Workers must accept pay cuts, says Germany

Greek workers will have to accept wage cuts even as the government reduces spending and raises taxes to restore public finances, Germany?s Deputy Finance Minister Joerg Asmussen said on Tuesday.

Greece squandered its competitiveness over the last 10 to 15 years after losing its monopoly as the European Union?s most southeasterly outpost amid the region?s expansion, Asmussen said in New York. ?The unique situation that Greece has had in the past disappeared and now one has to redefine what [you can] do in a country in order to grow because simply with fiscal austerity you can?t get out of this situation,? he said. ?De facto, you need a kind of internal devaluation starting with wage policy.?

Separately, France?s economy minister said that Greece?s financial aid package could be tweaked to similar timing terms as those accorded in the case of Ireland.

?What we are envisaging is an extension of the maturity of the Greek package just to be on the same schedule as the Irish package; so we are in a way amending the terms,? Christine Lagarde said.