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article imageGreek austerity package agreed with Troika to secure bail loan

By Katerina Nikolas     Feb 9, 2012 in World
Athens - Greek politicians have finally reached an agreement on new austerity measures demanded by the Troika in order to secure the 130 billion Euro loan needed to prevent a disorderly default in March.
The measures announced are the harshest yet and will impose immediate and extreme pay cuts. The Athens News reported that on Thursday afternoon the President of the European Central Bank, Mario Draghi, confirmed an agreement had been reached.
Draghi said "a few minutes ago I got a call from the prime minister of Greece saying that an agreement has been reached and has been endorsed by the major parties. This afternoon we will be having a euro group meeting with the ministers, and we will be having a full report of this, the agreement, and also a discussion of the further steps."
Eurozone finance ministers are due to discuss the details later with Greek Finance Minister Evangelos Venizelos in Brussels. Earlier on Thursday Digital Journal reported that a reduction of the minimum wage by 22 percent had been agreed. Athens News now carries a report detailing the new package of austerity measures as:
A direct cut to the minimum basic wage by 22 percent at all levels of pay contracts
• A further reduction of 10 percent on the basic wage of first-time employees between the ages of 18-25, bringing the total reduction on this category to 32 percent
• Reduced basic wages to remain frozen throughout the 2012-2015 period
• A timetable of negotiations with social partners until July for the drastic revision of the National General Collective Labour Contract (EGSSE) “to harmonise it with that of countries at similar competitive position”
• A reduction of 2 percent on social insurance contributions to the IKA private sector fund
Labour contracts
• A maximum of three years duration for all collective wage agreements
• Existing labour agreements lasting for another two years will be terminated no later than one year after the legislation of the present measures
• The transposition period for the carry-over of existing pay pacts is reduced from six to three months
• If a new collective contract is not signed within three months from the expiry of the previous one, the contract reverts to the current basic rates of the EGSEE
• A freeze on all maturity wage increases until unemployment falls below 10 percent
Budget cutbacks
• The total number of civil servants to be reduced by 150,000 until 2015. At least 15,000 must leave the public sector by the end of 2012.
• 550 positions of deputy mayors should be scrapped, including their auxiliary staff
• All special public sector payrolls must be revised downwards to save at least 0.3 percent of GDP (affecting payrolls of judges, doctors, diplomats, professors, military and police officers)
• Public investment programme to be cut by 400m Euros this year
As the austerity package is set to be finalized in Brussels, the latest unemployment figures were released showing a record number of unemployed for November at 20.9 percent. A new nationwide 48 hours strike has been called in protest against austerity measures for Friday and Saturday.
More about greek austerity, troika, Lucas Papademos, Evangelos Venizelos, Wage cuts
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