Greece makes austerity push, workers gear for strike

ATHENS Mon Nov 5, 2012 5:17pm IST

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ATHENS (Reuters) - Greece's government presents a new austerity package to parliament on Monday, facing a week of strikes and protests over proposals which must win lawmakers' approval if the country is to secure more aid and stave off bankruptcy.

Parliament is expected to vote on Prime Minister Antonis Samaras's package of 13.5 billion euros in cost cuts and tax hikes on Wednesday along with measures making it easier for firms to hire and fire workers.

Despite public exasperation at four years of belt-tightening that has helped wipe out a fifth of the economy and leave a quarter of Greeks jobless, the package and a tough budget slated for a vote on Sunday are expected to scrape through parliament.

Greece's powerful main public and private sector unions will launch a 48 hour strike against the legislation on Tuesday and plan marches in Athens' city centre. Journalists, doctors, transport workers and shopkeepers are also planning stoppages.

Approval of the reforms and the passage of the 2013 budget are crucial to unlocking 31.5 billion euros in aid from an International Monetary Fund and European Union bailout that has been on hold since the summer.

"These will be the last cuts in wages and pensions," Samaras said in a speech aimed at galvanizing the members of his centre-right New Democracy party.

"We promised to avert the country's exit from the euro and this is what we are doing. We have given absolute priority to this because if we do not achieve this everything else will be meaningless."

Without the aid, Greece will not be able to redeem a 5- billion euro treasury bill falling due on November 16. The bulk of the new aid tranche, some 25 billion euros, is earmarked to recapitalise Greece's struggling banks and kick-start moribund lending, a prerequisite to climbing out of recession.

But union leaders say the measures will simply deepen an economic contraction expected to run into next year.

"Our labour action next week will be part of efforts to avert policies that will sink the country deeper into recession and destroy the fabric of society," Yannis Panagopoulos, head of the GSEE private sector umbrella union, told Reuters.

ANGER, DISSENT

Athens' 14,000 taxi drivers are on strike and office workers complained of long commutes due to a stoppage on the city's metro, tram and city trains, which serve 500,000 people a day.

Protests will intensify on Tuesday, ratcheting up pressure on coalition deputies whose parties have slid in polls since a June election in the Mediterranean country of 10 million.

On Friday, a poll showed New Democracy's support had fallen to 22 percent, from 30 percent in the June election. Its Socialist PASOK partner had fallen to 7 percent, down from 12.3 percent according to the PULSE survey.

"Everything is black and it will only get worse. They have exterminated us. They have turned us into prisoners," said Eleni Tatsou, 38, who works in a kebab shop in central Athens.

"I haven't been paid for eight months, but I know nothing will change if I quit, so I'm waiting. Maybe I'll get paid one day. Maybe a miracle will happen."

The smallest ruling party, the Democratic Left, has pledged to stay in the government but rejects the plans to cut wages and severance payments and scrap automatic wage hikes, saying they will devastate workers who have borne the brunt of the crisis.

PASOK is struggling to shore up support for the measures after one of its deputies quit on Thursday in the wake of a narrow victory in pushing through a privatisation bill also demanded by the lenders, cutting PASOK's numbers to 32 seats.

At least five of those members have said they may not back the reforms. Without them, New Democracy and PASOK's remaining members are expected to muster around 154 of parliament's 300 votes, a move analysts say is vital to the government's survival and Greece avoiding insolvency later this month.

"The measures will pass, but the majority will be so slim that it will raise questions over the government's future viability," said Costas Panagopoulos, head of Alco pollsters.

Greece is hoping the "troika" of the IMF, European Commission and European Central Bank lenders extend a deadline to achieve a primary budget surplus of 4.5 percent, a measure of public finances minus debt maintenance costs.

That would give the battered economy breathing room, but the government has said it would shrink more than forecast in 2013 and debt would peak at 192 percent of GDP in 2014, 10 percentage points higher than earlier forecast.

That has increased the prospect of another round of debt restructuring, a source of conflict between the IMF and Greece's biggest EU creditor Germany who both privately say Athens' debt trajectory is unsustainable.

(Writing by Michael Winfrey; Editing by Alastair Macdonald)

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