ECONOMY

Christodoulakis calls for a ‘contract of trust’ with labor

Economy and Finance Minister Nikos Christodoulakis called for «a contract of trust» between the government and the unions on questions of the economy, growth and employment, as the government prepares to focus on the four crucial issues of tax reform, the European Union-subsidized Community Support Framework III investment plan, the National Plan for Employment and social security reform. «The participation of workers is a prerequisite for sustainable growth,» he said after a meeting at the General Confederation of Greek Workers (GSEE). Christodoulakis noted that Greece’s growth rate is currently three times the EU average, but surplus budgets will be required in coming years due to the high public debt, which may be the highest in the Union, but is also the fastest falling. He said that between 1994 and 2001 the purchasing power of Greeks had risen from 65 percent of the EU average to 73 percent, and labor productivity from 74 percent to 84 percent. The Greek average wage reached 81 percent of the EU average last year. Inflation was near the EU average and would approach it further this year, he said. The rekindling of upward price movements in January was temporary and largely due to adverse weather conditions. Referring to social security reform, probably the hottest potato in the government’s hands, Christodoulakis said this should take into account both social and growth considerations. It must originate in dialogue but also have a definitive fiscal dimension, be linked to the growth of businesses and also be in line with the systems of other EU partners. He said the reform would be judged in terms of the confidence which new entrants to the system would show and that a progressive government had no right to postpone the necessary changes. Entrepreneurship Speaking in Parliament during the debate on his recently unveiled bill on measures to boost entrepreneurship, Christodoulakis said that these were aimed at creating strong and modern firms of a large enough size to be able to stand on their own in the competitive European markets. He announced that a bill on corporate government to be tabled soon will provide for the separation of auditing procedures from those of internal control, which will, in turn, boost the credibility of firms’ financial data and guarantees to investors. Countering criticism that the entrepreneurship bill provides for a 50-percent tax break on expenses for specialized research and technology equipment only for large firms, Christodoulakis pointed out that a framework of tax incentives was already in place for small and mid-sized firms. He also dismissed fears that the promotion of mergers would lead to losses in tax revenue, as larger firms would be better placed to boost profitability and therefore pay more taxes. Negotiations with the third bidder on the list, Integrated Airline Solutions, were suspended on Friday after it failed to meet a deadline for the provision of financial guarantees.