New measures necessary for EU-IMF loans

Greece is close to agreeing to a new set of austerity measures, which will affect both the public and private sectors, that would unlock the emergency loans from the European Union and the International Monetary Fund that the country needs to keep its economy afloat, it emerged yesterday. Sources said that the government has accepted the proposals put forward by IMF officials that would lead to further tax rises and public spending cuts and would make it easier for employers in the private sector to hire and fire people. In the private sector, employers who have more than 200 people in their work force would be able to sack 4 percent of them at once rather than the 2 percent in place now. There will also be a gradual phasing out of the 13th and 14th monthly salaries that employees receive as Easter, summer and Christmas bonuses, possibly over the next five years. Employers will have the option of adjusting the remaining 12 monthly wages so that workers do not experience any sudden drop in income. Steps will also be taken to end collective contracts in certain professions. In the public sector, civil servants will lose their 13th and 14th monthly salaries and their supplementary pay, which has already been cut by 30 percent, will be reduced by another 5 percent. This would present savings of 1.7 billion euros, or 0.6 percent of Greece’s gross domestic product. If the government refuses to take these steps, it will have to increase indirect taxes, including a rise in the lower-end VAT charges. Also, there will be a freeze on hirings in the public sector for several years and contracts will not be renewed when they run out. Lastly, the government will have to sell off or shut down public organizations that lose money. With Greece unable to borrow money on the financial markets and the crisis spreading to other European countries such as Portugal and Spain, German Chancellor Angela Merkel yesterday called on Athens and the IMF to speed up their discussions so that the emergency loans could be released. Merkel met in Berlin yesterday with the IMF’s managing director, Dominique Strauss-Kahn, and European Central Bank President Jean-Claude Trichet to discuss the financial package. Merkel said it was vital that the EU and the IMF do not allow Greece to collapse like US investment bank Lehman Brothers.

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