Talks on austerity measures resume

Tough negotiations are to resume this week on two fronts — between Prime Minister Antonis Samaras and his coalition partners on the one hand and between ministry officials and representatives of the country?s troika of foreign lenders on the other — in a bid to move toward an agreement on a tough package of some 11.5 billion euros in austerity measures demanded by Greece?s creditors.

Kathimerini understands that the talks will focus on some 4 billion euros in measures that have yet to be agreed, with the bulk of the package believed to comprise cuts to state spending, pensions and social welfare benefits.

With Samaras and his coalition partners — socialist leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis — having rejected the troika?s calls for layoffs in the public sector, negotiations are expected to shift to an alternative measure being proposed by the government — the raising of the retirement age to 67 from 65.

Other cuts that government officials are expected to insist on — as alternatives to even heavier cutbacks in the area of pensions and salaries — are in the areas of state administrative costs, local authority funding and spending on health and defense. The troika is said to have expressed reservations regarding the extent to which such measures can be enforced but government officials will try to win some concessions.

Another sensitive issue which the troika is expected to broach is the proposal for changes to the labor market, including the introduction of a six-day working week and a reduction in the amount of compensation private employers are obliged to give dismissed employees. In an interview with Kathimerini, Labor Minister Yiannis Vroutsis said that adding such onerous new measures to existing austerity ?does not contribute to the creation of a smooth climate.?

Meanwhile the government is also reportedly examining the scrapping of a 5,000-euro income tax-free threshold as a way of making potential savings.

The aim of Finance Minister Yannis Stournaras, as expressed at the end of Friday?s informal summit of eurozone finance ministers in Nicosia, is for the austerity package to be finalized in the next 10 days so that the troika can issue its report by early October, paving the way for a decision on the release of funding for Greece at a European Union summit on October 18. Without the 31.5-billion-euro loan, Greece faces defaulting on its debts.

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