Pasok and Democratic Left promise to block plans for 50,000 layoffs after inter-party talks fail to reach agreement
The crisis engulfing Greece has deepened after two of the governing coalition parties resisted demands from Brussels for 50,000 public sector job cuts, and unions called a general strike for later this month.
The left-of-centre Pasok and Democratic Left parties vowed to prevent the government from capitulating to demands for jobs cuts after figures revealed a jump in the unemployment rate to almost 24%.
Tensions rose inside the prime minister's official residence, the Maximos Mansion, during a meeting of the three party leaders that make up Greece's new government. Under pressure from Brussels, right-of-centre prime minister Antonis Samaras has promised to find an extra €11.5bn in public spending cuts and tax rises over the next two years, and is under pressure to fire large numbers of workers as part of the plan.
Democratic Left leader Fotis Kouvelis, who has already voiced his objections to the plan, was joined in opposition at the crunch meetings by Pasok leader Evangelos Venizelos, who said: "For us there is no question of layoffs of civil servants."
Venizelos, who is also under pressure to agree a six-day working week as part of the proposals, said Greeks must continue to enjoy the labour rights enjoyed by other Europeans. "There can be no further change in labour relations beyond the European framework. Whatever is valid in the rest of Europe must also be valid in Greece. We are a member state of the European Union, not just the eurozone," he said.
Echoing widespread concerns that cuts will drive Greece further into recession, he insisted that the financial realignment deadline of 2013-14 must be extended another two years to 2015-16: "Just as I said … after my discussion with the troika, the extension of the fiscal adjustment period to four years is a foregone conclusion. The discussion with the troika was also based on this case."
The troika is made up of officials from Brussels, the European Central Bank in Frankfurt and the Washington-based International Monetary Fund, whose inspectors are concluding a review that will determine whether Greece gets further aid.
A spokesman said the government would resist proposals for further wage cuts and was making "every effort to not touch labour relations". Simos Kedikoglou said a pay reduction of 6% for police and military personnel, which is among the proposals in a package of austerity measures, must be overturned. "We have already lowered labour costs, and there is no reason for such issues to be raised by the troika", Kedikoglou said.
Unions called for a 24-hour stoppage on 24 September as the jobless rate hit 23.6%, leaving 1.17m people out of work.
Although no final agreement was reached between the coalition parties, Venizelos said there had been an "improvement" in the discussions and that an end was in sight.
French finance minister Pierre Moscovici, in Greece for talks with Samaras said: "The essential thing is that the commitments made by Greece are met and that an agreement is reached with the troika."
Analysts said Moscovici showed no sign of being willing to back Greek requests for an extension of its latest bailout package, saying that it was vital that the conservative-led government in Athens maintained "determination" in pursuing reform goals.
"We hope that this determination is unwavering," he said.
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