Δημοσιευσεων συνεχεια

EU call for Greece to cut public sector pay
By Tony Barber in Brussels and Kerin Hope in Athens

Published: January 31 2010 16:43 | Last updated: February 1 2010 07:31

Greece will be told this week to cut public sector wages and improve tax collection under a European Union initiative to prevent its financial troubles from destabilising the eurozone.

The European Commission will recommend on Wednesday that Greece’s socialist government should “cut average nominal wages, including in central government, local governments, state agencies and other public institutions”, according to a draft proposal.



Greece is battling to regain the confidence of markets after being condemned by the Commission for falsifying public finances data and concealing its deficit size. Its finance ministry insisted over the weekend that there was “no possibility of the [stability] plan being rejected” by the European Commission.

The Greek parliament approved a 2010 budget in December that George Papandreou, prime minister, described as the most stringent since the return to democracy in 1974. Athens has also submitted a three-year plan to Brussels that foresees a reduction of the deficit to less than 3 per cent of GDP by the end of 2012 from an estimated 12.7 per cent last year.

EU policymakers have welcomed the broad thrust of the Greek measures, but the Commission and other eurozone governments are not convinced they will be enough.

The Commission is expected to recommend that Greece should crack down on tax evasion and possibly introduce a tax on luxury goods.

The Commission’s recommendations will be passed to eurozone and EU finance ministers for approval on February 15-16, and Greece will have four months to show it is putting the measures into practice.

If it is judged not to have done so, the other 15 eurozone governments could under EU law impose financial sanctions. No country has been subjected to such punishment since the euro’s birth in 1999.

The Commission also wants to give Eurostat, the EU’s statistical agency, the power to audit the accounts of member states – specifically, those of Greece – but a formal legislative proposal is not expected as early as this week.

Other EU governments are adamant in public that they will not provide financial aid to Greece, but it is tacitly acknowledged in Brussels that assistance would be provided if Greece’s debt crisis overwhelmed the government.

The Greek government is bracing for a surge in public unrest over its austerity measures, with trade unions planning two days of strikes and protests on February 10-11.

Greek farmers on Sunday resumed their tractor blockade of a northern border crossing with Bulgaria, an EU neighbour.

As a result some 200 trucks were lined up on the Bulgarian side of the Promachonas crossing, a main route for Bulgarian exports to the EU that has been blocked on and off for two weeks.

The Bulgarian government has complained to the Commission that the farmers’ protest – demanding extra crop subsidies and tax breaks on fuel – is hindering free movement of goods within the EU.