Euro Crisis

09.25.12

As Austerity Cuts Loom, Greeks Strike, But More Cuts Are Demanded

From teachers to animal control, everyone in Greece is striking to protest the looming austerity cuts. And now bailout funds are being held until Greece doubles those austerity cuts. Barbie Latza Nadeau reports.

No one, it seems, is going to work in Greece this week. Teachers, doctors, lawyers, journalists—even tax collectors—have walked off the job to protest the country’s biting austerity measures. Judges, protesting a 38 percent pay cut, are only hearing cases nearing the statute of limitations. Bus drivers are parked, protesting longer work days and pay freezes. There are limited garbage collectors and few animal-control workers on the job to protest cuts in benefits like pension contributions. Firefighters left their posts Monday, ambulance workers did not work Tuesday, and police officers have warned that may turn a blind eye to what could be chaotic protests as the country’s labor unions and private-sector leaders join the fray on Wednesday for the largest national strike since the June elections that launched Antonis Samaras into a dubious position of power.

While Greeks take to the streets, their coalition cabinet will be holed up working the numbers to try to shave off a whopping €11.5 billion from the 2013-14 budget. Government leaders have been entertaining European Union inspectors all week, trying to prove that they are working diligently to meet the requirements of the €31 billion bailout loan due from the European Central Bank (ECB) and International Monetary Fund (IMF). And Germany’s Der Spiegel broke the news that the “troika”—the European Union, the ECB, and the IMF—won’t release funds that are needed to keep the country from defaulting unless Greece actually doubles those cuts to close an estimated €20 billion budget gap.

The Greek government has denied the budget shortfall, insisting their deficit is just €13.5 billion—of which cuts of €11.5 billion satisfy the troika’s demands. But IMF chief Christine Lagarde didn’t seem convinced, worrying openly about Greece’s future while speaking in Washington this week. A “financing gap” has emerged because of “the macroeconomic situation, the major delay in privatization and therefore shortfall in proceeds from the privatization,” as well as “limited revenue collection,” she said.

The austerity measures are brutal no matter how much they have to cut to get the aid they so desperately need. Unemployment already hovers at around 25 percent—and nearly 55 percent for those under 29. Since June 2011, nearly 1,000 jobs have been lost every single day. The retirement age will have to be raised from 65 to 67; many workers will have to work a six-day week; the country will have to raise the cost of public transportation and cut public-sector jobs. In a recent poll by MRB, over 90 percent of Greeks feel that the austerity cuts are unfair to the poor. Nearly 80 percent of the population says the country is headed in the wrong direction with austerity cuts.

Samaras and his New Democracy Party have a razor-thin majority in Parliament, thanks only to a coalition with the Socialist PASOK and smaller Democratic Left parties. But the parties are not altogether cohesive, and many PASOK party faithful have threatened not to vote for the tough austerity measures. The austerity package will go through Parliament as one bill rather than separate items, thus making it far more vulnerable. German leaders have insisted that Greece finalize its budget by October 19 or risk losing its bailout funds, effectively pressuring the Greek government to push the final budget in less than a month. Samaras plans to address the Greek population this week to calm fears that the worst is yet to come.

In a recent poll by MRB, over 90 percent of Greeks feel that the austerity cuts are unfair to the poor. Nearly 80 percent of the population says the country is headed in the wrong direction with austerity cuts.

If Samaras, who won in June on a pro-euro platform, were to lose a confidence vote on the austerity measures, that would pave the way for the radical-left anti-euro party SYRZIA to take power, which could ultimately lead to Greece’s exit from the euro currency. At a meeting of Christian Democratic leaders in Rome over the weekend, Samaras said that “an exit from the euro zone is not a choice for Greece, it's a nightmare. For us it's not an option, it's a total disaster." 

Lagarde agrees. “For many economies, under the present circumstances it will take years of fiscal adjustment to get back to pre-crisis levels,” she said.  “Without sufficient growth, we should not delude ourselves about how painful this is going to be.” That’s not much comfort for the Greek population already living the nightmare of austerity.