Greeks see red over new austerity drive

ATHENS: Greek unions vowed on Sunday to battle an unprecedented round of austerity measures, wage and pension cuts, approved by the socialist government to seal agreement on a massive financial bailout.

European finance ministers endorsed a 110-billion-euro (146-billion-dollar) package of loans on Sunday, extended by the eurozone and IMF, to keep Greece from going bankrupt and shore up the bloc's single currency.

But the announcement came only after Athens agreed to make draconian spending cuts of 30 billion euros over three years, with civil servants and the retired bearing the brunt of the effort.

"They are the most unfair and hardest measures in the modern history of Greece," said Yannis Panagopoulos, president of the million-member GSEE private-sector union.



Three days from the third nationwide general strike in as many months, the ADEDY public sector union called for a halt to "the downward spiral by blocking the anti-social measures."

Desperate to secure EU and IMF loans, the government committed among other measures to scrapping year-end bonuses for civil servants and retirees equivalent to two months of extra pay.

The second wave of cuts in two months also includes a 23 per cent hike in value added tax, while retirement contributions will have to be made over 40 years instead of 37 currently.

"They are going to worsen the recession and plunge the economy into a deep coma," Panagopoulos said.

At the other end of the political spectrum, the head of conservative opposition party New Democracy, Antonis Samaras, accused the government of pushing the country into "the vicious circle of recession."

Announcing the austerity push, the government acknowledged the recession would be twice as bad as expected, with the economy forecast to contract four per cent this year and only return to growth in 2012.

Unveiling the measures at an extraordinary cabinet meeting, Prime Minister George Papandreou sought to justify them by arguing that "sacrifices are hard but necessary" and insisting that otherwise "Greece would be in bankruptcy."

Despite being bitter about the cuts, Uranya Papadopoulou, a 41-year-old teacher, judged that Papandreou was not to blame for hardship.

"With these measures, I lose 3,000 euros per year. I don't have any other choice than to start tomorrow looking for a second job," said Papadopoulou, a mother of two children.

"We have to react, but our unions don't represent many people any more," she added. "I'm afraid that the country will only put up passive resistance, which would only make things worse."

University of Athens economics professor George Pagoulatos said that the bitter pill would "lead to the end of many privileges acquired over time and reduce the middle class' income by about 20 per cent."

He said that as a result people would "have a hard time paying for their children's education and medical care" although the measures would have the intended effect of dramatically slashing the public deficit.

"There will initially be strikes but they should be limited because the population is convinced that the measures are inevitable," he said.

Greek unions called Wednesday's general strike even before the new cuts were announced and the GSEE's Panagopoulos vowed it would be "the beginning of a long battle."

But with Greek public opinion split between anger and resignation, according to polls, the first two days of strikes and protests called over the measures failed to draw a massive turnout.