The Greek prime minister has toughened his austerity program to include a blanket civil service pay freeze, as the EU readied plans to tightly monitor Athens’ performance and possibly demand even more cutbacks.
In a live televised address on Tuesday evening, Greek Prime Minister George Papandreou said he would also hike fuel taxes, increase retirement ages and speed up an overhaul of the country’s tax system, which will be presented in parliament next week rather than at the end of the month.
“This is an effort to stop the country’s course toward the cliff,” Papandreou said. “Our country is at the center of a speculative attack … It is being treated as the weak link of the eurozone.”
His speech came a day before the European Commission is scheduled to issue an assessment of Greece’s plan to curb its runaway budget deficit, which is currently more than four times the EU limit of 3 percent.
Papandreou, who said Greece faced an “unprecedented crisis,” had previously said civil servants earning more than 2,000 euros (US$2,800) a month would have their salaries frozen, but he has now expanded that to include all civil servants, who will get no raises beyond seniority increases.
He pledged to go after tax evaders and those who use offshore accounts to avoid declaring income, and said those who could afford to pay more would be forced to do so.
Athens has resisted pressure from the EU to impose the sort of drastic spending cuts taken by fellow eurozone member Ireland, which include civil service pay cuts.
But measures such as salary freezes, higher fuel taxes and an increase in retirement ages will hit people in the middle and lower income brackets, risking a backlash from unions that have so far been relatively restrained. The civil servants’ union had previously declared a strike for next Wednesday, while customs and tax officials are set to walk off the job this week.
“The government’s policies are clearly aimed exclusively at raising money and once again lay the burden on those who have been exploited for years — workers and pensioners,” said Ilias Iliopoulos, general secretary of the Greek civil servants union.
“These policies will lead nowhere,” he said.
Farmers have already been blocking major highways across the country on and off for more than two weeks, demanding financial help to overcome low food prices. The government has insisted there is no money to be spared.
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