Greek Government Bailout – Analysis of the conditions attached to it

Ekathimerini did a nice little write-up on what is in the package demanded by the Troika.

I’ll got through it point by point and give my perspective.

* A reduction of 22 percent to the minimum wage, currently at 751 euros per month gross, with an additional 10 percent reduction to the basic salary for young people aged under 25 – why have a minimum wage at all, Greece would be better off it people could work for the wage they wanted, getting employers to compete with each other on wages is the best way to increase wages.

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* A freeze on the minimum wage of three years – again, why does the government feel it is qualified to dictate what people should work for?

* A freeze on all salary raises until the unemployment level is reduced from its current 19 percent to under 10 percent – Can we say there will be no more wage increase for the next 10 years?

* A reduction in the pensions of employees of state companies OTE telecoms and Public Power Corporation by 15 percent, as well as of seamen by 7 percent – why does the government feel it is okay to take money from people who have already paid into their pension. Can you imagine a bank telling you they are going to cut the amount of money in your bank account because they need extra cash? Anyone who is claiming a pension or is due a pension in the next 10 years should be left out of this. They have paid their dues.

* Placing in the labor reserve scheme 15,000 state employees by the end of 2012, with the target of reducing general government employment by 150,000 by the end of 2015 – this is complete nonsense, only last week ao government spokesman came out and said they would not be firing anyone. Expect no job cuts from government.

* The reduction from six months to three of the period over which collective sectoral labor agreements continue to be in effect after their expiration. If a new labor agreement is not drawn up in this period, the sector in question will be bound by the basic national standard, without, however, forfeiting benefits for years of service, job hazard, children and education – why does the government get involved in people’s business? It is between the employer and the employee, there is nothing the government can do to help anyone, except do less.

* Collective sectoral agreements will have a limited duration of three years, while existing contracts with a 24-month duration will expire in one year from now – see above

* A reduction in contributions to the IKA Social Security Foundation of 2 percent effective immediately, and an additional 3 percent in 2013 – 2 percent? Only? Why not give people to choice of whether to pay IKA or not

* A review by end-June of the special salary status of judicial employees, state doctors, diplomats, and police and military personnel – Special salary, I can see this causing some news stories in the future. What exactly is a “special salary” anyway?

* The sale by end-June of scheduled share packages in the following state-owned companies: Public Gas Corporation (DEPA), gas distributor DESFA, Hellenic Petroleum (ELPE), betting agency OPAP, the Attica and Thessaloniki water and sewerage companies (EYDAP and EYATH), and the International Broadcasting Center – this will not help Greece in any way. Look at what Thatcher did, taxes did not come down, bills increased and the UK government now gives money to some of these private companies because they say they cannot make money. Deregulate and allow other companies to come in by all means. Thatcher’s privatisations were theft from the British people. Ultiilities that once belonged to the people were sold off by their government with taxpayers seeing none of the money.

* The abolition of permanency for employees at state-owned companies and banks – why was there permanency to begin with?

* The restriction of tax exemptions, simplification of the value added tax and property tax structure – this is the best one. For simplified read increased. Taxes will be simplified alright, they will all be risen to match the highest rate. More simple and more government theft.

* The closure of 200 tax offices across the country by the end of the year – Okay, but doesn’t the government claim they have problems collecting taxes?

* The hiring of 1,000 more tax auditors, to bring their total number by the end of April to 2,000 – Into existing offices? There is so much space in government offices to be able to close 200 AND increase the number of staff??

* Eliminating the extension of payment terms for overdue taxes and social security contributions – who knows what this means.

* A further reduction in military spending by 0.15 percent of GDP – so around 300 million Euro a year less. Sounds reasonable, but why only cuts in military spending?

* The recapitalization of Greek banks through common shares with limited voting rights and through contingent convertible bonds – who is going to buy these shares? Banks shares in Greece are down as much as 70% this year alone, I find it hard to believe investers will be found. Genuine ones anyway. I can see these new “investors” being Greek and German taxpayers.

 

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