Athens' fragile coalition could be heading for a showdown with unions and anti-bailout forces over prospect of more job losses
New spending cuts being asked of Greece by international creditors are pushing Athens' fragile coalition towards a showdown with unions and anti-bailout forces amid signs that it will be civil servants who will bear the brunt of the belt-tightening.
Word is spreading of an incendiary autumn with labour groups, backed by the radical left main opposition Syriza party, warning of protests in September. The prospect of mass lay-offs in the state sector and a spate of planned privatisations are setting the scene for the "hottest fall yet," unionists said.
"Mass demonstrations are being prepared by both public and private sector unions," said Ilias Iliopoulos general secretary of ADEDY, the union of civil servants. "As long as the [governing] parties don't respect their pre-election pledges of no more cuts and no more firings they will face the wrath of the people," he said.
With the country enduring a record fifth straight year of recession and unemployment hitting an unprecedented 23.1%, Greeks, he said, could "take no more'".
Passions were reignited this week when barely a month into the job the new finance minister, Yiannis Stournaras, conceded that the "numbers don't add up". He admitted the government was still €4bn short of its budget target.
The debt-stricken country has to come up with "alternative solutions" to appease lenders at the EU, ECB and IMF, the so-called Troika that set as a condition of further assistance €11.5 bn in additional cuts – the equivalent of 5.5% of GDP. Among options being discussed, he said, was a controversial plan placing thousands of civil servants in a special labour pool on reduced pay. The scheme, seen as the first step towards dismissal, was dropped last year in the face of widespread hostility.
On Thursday senior government officials insisted that the politically risky move would go ahead with as many as 40,000 civil servants being gradually laid off. "The labour reserve plan will go ahead this time," an official told Reuters. Another insider said: "This is a measure that may not produce dramatic and immediate savings but it will give credibility to our efforts to reform."
With the country's coffers close to empty and the paralysis caused by two successive elections having delayed the next €31.5bn tranche of aid, the government is under pressure to show willing.
Failure to implement reforms, exacerbated by months of foot-dragging, has given way to suspicion among Greece's troika of creditors with Athens being repeatedly warned it will face default, and euro exit, if it does not conform.
Despite a reported change in atmosphere during a recent visit by troika inspectors, Greek officials are acutely aware that they can afford no let up in the reform process if EU-IMF monitors are to produce a positive review on which further loans depend. Piling on the pressure, EU officials said plans were afoot to postpone Athens' next injection of cash until October – prompting officials to issue a denial amid fears that payment of public sector pensions and salaries will be delayed.
With Greece's economic indicators worsening since the outbreak of the crisis in late 2009, it is debatable whether the government would survive enforcing measures that are so unpopular. In a sign of the mounting storm, Fotis Kouvellis, the leftist leader supporting the coalition, described the labour pool scheme as a "fiasco" and said he would not countenance further policies that exacerbated the plight of ordinary Greeks.
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