Greek PM to meet with labor union, business repsATHENS, Greece (AP) — Greece's prime minister discussed the sensitive issue of labor costs Wednesday in a series of meetings with unions and trade federations before a crucial visit by the country's debt inspectors.
ATHENS, Greece (AP) — Greece's prime minister discussed the sensitive issue of labor costs Wednesday in a series of meetings with unions and trade federations before a crucial visit by the country's debt inspectors.
Lucas Papademos' meetings come a day after government spokesman Pantelis Kapsis warned that Greece could have to leave the euro if the struggling country fails to finalize the details of its second international bailout, for €130 billion ($169 billion), and that more tough austerity measures may be needed.
Debt inspectors from the International Monetary Fund, European Central Bank and European Commission are expected in Athens in mid-January. Collectively known as the troika, the inspectors have previously said Greece needs to reduce its labor costs as part of efforts to make the country more competitive.
Dimitris Daskalopoulos, who heads the Hellenic Federation of Enterprises, said his industry federation would do "whatever it can" to ensure the minimum wage is not lowered.
"We must discuss how we will formulate the average labor cost, so that both employment and competitiveness are favored," Daskalopoulos said.
Greece has been kept solvent by an initial package of €110 billion ($142 billion) bailout loans, which began being disbursed in May 2010. In return, the government imposed deeply resented austerity measures to contain a bloated budget deficit, including cutting salaries and pensions and introducing repeated tax hikes.
The measures have led to frequent and often violent demonstrations over the past two years.
Yiannis Panagopoulos, the head of the GSEE union, which represents mainly the private sector, said talks with the prime minister focused on concerns over competitiveness in the labor market.
Panagopoulos insisted that the national collective wage agreement, which includes minimum wage provisions and those of holiday pay known as the 13th and 14th salaries, were not up for negotiation. The extra two salaries per year have been trimmed in the public sector as part of austerity measures.
The second rescue package was agreed to in October. However, key details of that deal are still being negotiated — most crucially a provision under which private creditors such as banks and investment firms would take a 50 percent cut in the face value of the Greek bonds they hold.
Greece has been struggling to get private creditors to agree to key aspects of the haircut, which it has to implement ahead of the March 20 maturity date of €14.4 billion worth of bonds. Athens would not be able to make the repayment without the second bailout, while the bond writedown would also reduce and delay the amount that would be due.
The Institute of International Finance, which has been leading the negotiations on the debt restructuring on behalf of Greece's private creditors, said late Tuesday that some progress had been made in the discussions in recent days. However, indicating the urgency of finding a solution, the IIF stressed a deal had to be found "in the days ahead."
Negotiating the details of the second bailout and ensuring Greece gets the funds is the main mandate of the temporary coalition government headed by Papademos, a former central banker appointed in November after a political crisis forced the country's socialist prime minister to resign.
On Tuesday, Kapsis warned Greece would be unable to stay in the euro without the new bailout deal.
"This famous loan agreement must be signed, otherwise we are outside the markets, out of the euro and things will become much worse," he told private Skai TV.