Greek Unions, Employers Reject Wage Cut Plan

Posted February 3rd, 2012 at 3:25 pm (UTC-5)
Leave a comment

Greek unions and employers have joined forces to reject a demand from the country's international creditors that they cut wages to help the Athens government win approval for its second bailout in two years.

The unusual alliance of labor and management groups told the government Friday that proposals to cut the country's minimum wage and impose salary cuts were unacceptable. They said private sector workers have already lost 14 percent of their income because of emergency taxes the debt-ridden Greek government imposed in the last two years.

Greece has been attempting — unsuccessfully so far — to cut in half the debt it owes 32 large private financial institutions, a $130 billion reduction. At the same time, it is seeking approval for a new $169 billion bailout from the International Monetary Fund and the other 16 countries in the European bloc that use the euro currency.

The international creditors have demanded that Greek workers take pay cuts to make the country's economy more competitive with its trading partners. But the workers and their employers say that wage cuts would diminish consumer spending in the country, and ultimately reduce tax revenue for the government.

Greece says it needs the debt relief and new funding to avoid a default on $19 billion in bond payments in March. Both the country's private and public creditors have demanded that the government adopt more unpopular austerity measures before they will approve additional assistance.

A spokesman for the Greek government said its officials are engaging in “difficult negotiations and have difficult decisions to make.”