Greece’s Biggest Union Sets Strike, Threatens Cuts
Greece’s biggest union approved the second mass strike this month and tax collectors began a 48-hour walkout, showing that Prime Minister George Papandreou’s parliamentary majority may not be enough to implement his plan to cut the European Union’s largest deficit.
GSEE, which represents about 2 million workers in the private sector, voted at a meeting in Athens today to walk out Feb. 24. The main public-employee union plans a Feb. 10 strike to protest spending cuts as Papandreou steps up budget cuts to persuade investors Greece won’t need a bailout.
“It is still the beginning,” Stathis Anestis, the GSEE spokesman, said on the telephone today. The slogan for the strike is “people come first, markets and profit second,” he said. Anestis reiterated the union’s view that Papandreou’s government “succumbed” to the markets.
Greece’s plan to narrow the budget gap won European Commission backing yesterday after the government announced more measures to reduce the shortfall. Papandreou promised to increase fuel taxes and raise the retirement age, while retreating on a promise to raise wages faster than inflation, a pledge that helped him win elections in October.
“The first part of the action plan is on its way and now has the EU’s approval,” said Ioannis Sokos, a London-based interest-rate strategist at BNP Paribas SA. “What remains is the second part which has to do with the Government versus the Greek people. This is as tough as the first part.”
Stocks, Bonds
The benchmark ASE stock index fell about 3 percent today. Bond rose after European Central Bank President Jean-Claude Trichet said he is confident that Greece can cut its budget deficit. The risk premium investors demand to buy Greek debt over comparable German 10-year bonds narrowed 3 basis points to 347 basis points.
“We expect and we are confident that the Greek government will take all the decisions that will permit them to reach that goal” of cutting the deficit below the European Union’s limit, Trichet said at a press conference in Frankfurt.
Papandreou, 57, has appealed twice this week for Greeks to accept “painful” measures, saying the country can’t afford strikes and blockades. The previous government of Kostas Karamanlis was plagued by labor protests after he tried to tighten pension rules and raise taxes to shore up the government’s finances.
Tax Collectors Strike
The tax collectors struck to protest cuts in bonuses to the public sector. About 98 percent of the 14,000 collectors joined the protest, a POEDY-DOY union spokeswoman said. Also striking for 48 hours are customs workers and Finance Ministry employees, who blocked entry to the economy and finance ministries in central Athens today, the state-run Athens News Agency reported.
“The majority of Greek society continues to support us because it knows these are necessary decisions and taken with a sense of justice,” Finance Minister George Papaconstantinou told Greek Mega TV in an interview late yesterday.
The plan endorsed by the European Union would slash the deficit of 12.7 percent of gross domestic product to within the EU’s 3 percent limit in 2012. Concern that Greece and other European nations may struggle to contain their deficits has pushed the euro down more than 7 percent since late November.
Joaquin Almunia, the EU’s monetary-affairs commissioner, was forced yesterday to reject suggestions International Monetary Fund aid would be needed.
The euro nations “have taken the situation in hand,” IMF Managing Director Dominique Strauss-Kahn said today on RTL radio in France. “We are there to help, if asked, but I understand that the euro nations want to handle the situation themselves.”
Union Tests
Greek unions have already tested Papandreou, who heads the socialist Pasok party. Dockworkers struck for several weeks in October to demand the government keep a promise to re-examine the handover of part of the port to Hong Kong-based Cosco Pacific Ltd. Farmers have been blocking roads and border posts for about two weeks to demand higher prices.
Support for the previous Karamanlis government was weakened by December 2008 riots sparked by the police shooting of a teenager. At the time, GSEE and ADEDY, the civil-service group representing about 600,000 state workers, rebuffed a call from the prime minister to cancel a planned general strike to prevent more clashes, adding to the pressure on Karamanlis.
“Greece and the rest of the fiscally challenged periphery is still in for a bumpy ride, not least because the social and political opposition to austerity programs of this kind is likely to build from here,” said Russell Jones, head of global fixed-income strategy at RBC Capital Markets in London.
Strike Next Week
ADEDY called its Feb. 10 strike to oppose plans by Papandreou to deepen spending cuts and to limit wage increases to those earning less than 2,000 euros ($2,782) and to trim bonuses for all state workers.
Papapandreou widened the wage freeze to all public workers on Feb. 2. State pay increases provide a gauge for increases given to workers in the private sector.
“Our worst expectations were confirmed,” ADEDY Chairman Spyros Papaspyros said yesterday. “There is more to come.”