Greek review

Student Protested Outside Greek PM’s Home

Some 150 school and university students protested outside the home of Greek prime minister George Papandreou on Thursday morning. Six riot police squads were immediately sent to the Castri area in the north suburbs of Athens. Cordoning the area, the police hindered the students to near PM’s home, at a distance of 500 meters. Students removed some garbage bins but all in all the demonstration ended peacefully.

Of course, they chanted slogans like “Bread, Education, Freedom”, a slogan with its origins in the military dictatorship period. Back then, the slogan was chanted also by former students who currently holding important ministerial posts in the Greek government.

Many wondered if Socialist Papandreou heard the slogans. The question remains unanswered. Nobody knows where is the prime minister, as he leaves all important crisis negotiations, parliament briefings and television appearances to Finance Minister, Evangelos Venizelos.

To the criticism by many citizens and opposition party that ‘the prime minister is hiding’, we read today on the internet that George Papandreou is holding private meetings with PASOK deputies to be informed about the pulse of the society


Can the New Austerity Measures Prevent a Greek Default?

There must be “something rotten in the state” of… Greece. While austerity measures drain the Greeks, freeze the market and deepen the recession, the government seems unable to take control of its expenses or to raise revenues due to … the recession. The State Deficit amounts to €18,086 million in January-August 2011, according to Greek Finance Ministry, against the new target of €18,974 million, after the revision of the medium-term fiscal strategy. The deficit was €14,813 million in the corresponding period last year.

Here is the Greek Finance Ministry statement:

Total revenues increased by €125 million, while total expenditure reduced by €763 million.

“Net revenue amounted to €30,694 million. The shortfall was mainly due to higher than expected recession, non-resumption of road tax revenues, reduced tax revenues, reduced income and increased tax refunds.

Expenditure is increased by 8.1%, compared with 2010. The increase was primarily due to increased interest expenses, increased subsidies to insurance funds, payments of unemployment benefits, healthcare expenditure.

These figures relate only to the execution of State Budget and not all the financial data for the general government deficit.”

Greek PM’s unofficial counselor on economic issues, Nobel laureate Joseph Stiglitz, criticized the austerity measures stressing that they lead to deeper recession. Speaking to private television channel Skai TV, Stiglitz said: “Austerity is not the answer to the needs of fiscal stability. Greece’s austerity policy has negative results, the economy sinks and the recession deepens.”

At the same time, we read in the press, primarily in the international one, that a Greek default is inevitable. Can the additional austerity measures prevent it? Here is a commentary by Greek economic news portal

Do New Measures Rule Out A Default?

Next week the Greek government could answer whether the new austerity package would be sufficient to ensure the release of the sixth instalment and avoid (or postpone) default.

The big question for both government officials and EU executives is whether the external conditions, ie larger than expected slowdown in the Eurozone, would affect the recessionary course of the Greek economy, which is unofficially estimated to exceed 5.5%.

A EU official, which has cooperated with the Task Force that was established a year ago to examine the Greek problem, told that “the Eurozone and the U.S. are facing an extremely difficult situation that requires extraordinary measures to deal decisively. The Greek case is no longer certain that it could be addressed by the kinds of measures that have been launched for over a year.”

European Commission seems now to focus on the double problem of the debt and financial crisis, a combination that worsens the prospects for recession in the Eurozone.

This assessment will be presented to the IMF conference, while its leadership has already warned that U.S. and Europe face a second round of recession with unpredictable consequences, as now, unlike 2008-2009, unemployment rate is already high and governments have exhausted many of the fiscal and monetary tools available.

In other words, the succession of sharp cuts in public expenditure in Greece could be to no avail because of the global debt crisis and recession, without dealing with the danger of internal or external default.

On Wednesday, European Council President Herman Van Rompuy said in New York that the cost of an accident in Greece could be uncontrollable and the contagion risk from any such default would be too great. (source: )

Good to know, that a “selective default” won’t affect people’s bank savings, a Greek banker told me yesterday….. Is it so?

What’s Up in Greece on Sept 22?

A traffic jam in Athens due to public tranport strike and a shock due to the new austerity measures announced last nihgt. The good thing among the chaos is that temperatures dropped – although some regions were severly hit by storms and rain. So it’s still hard to find news with good vibrations….

Greek media publish countless calculations about how much the new measures will cost to our pockets. In the average, every Greek will lose 400 euro. Where to find this money? Cut expenses and buy wood for the fire place. Then…

…. it looks as if the measures are not enough to convince the Troika. There are rumors that at the very end, up to 100,000 civil servants will have to be on ‘labour reserve’. Deptuty prime minister Theodoros Pangalos told two swiss newspapers that “70,000 work places will be cancelled in the public sector”.

It looks as if additional measures will be needed. Apparently the issue will be clear after the Troika-Venizelos meeting in Washington over the weekend.

One of the most painful and outrageous issues of the unoctrolled taxation and the cuts in pensions is that the state even tax those living at the poverty threshold… As of January 2012, taxes will be imposed on annual income of €5,000.

“In Greece, a single-member household is considered to be at risk of poverty when annual income does not exceed € 4,264 (an unacceptably low amount considering realistic estimates of the cost of living in Greece), asagainst € 9,455 in Germany and 13,863 in Luxemburg. The average in the 15-member EU is € 8.319. For a household of four, the amount rises to € 8.955 as against € 19,855 in Germany and € 17,469 in the 15-member EU.” (Crete Gazette)

Benefits for families with 3 or more children will be cut, should the family has more than 55,000 euro annual income.

The announcement came last night because quite some ministers urged Finance Minister E. Venizelos to do so due to pressure by the society.

Downtown Athens will experience a protest-storm today, as Train-workers demonstrate right now, police officers and students later.

There is a Breaking News, that school students protests outside the Prime Minister’s home!


Athens: New Public Transport & Taxi Strikes Schedule

Public transport workers and taxi owners continue their protests and strike actions. Tomorrow, Friday, Sept 23rd 2011, there will be no Metro, Urban Train HSAP and Tram. On Monday, Sept 26th, bus and trolley drivers will launch a work stoppage from 12 noon until 5 pm. A new general public transport strike has been announced for Tuesday and Wednesday, September 27th and 28th 2011. The 48-hour strike chorus had been joined also by the taxi owners. The strike will hit the residents of Athens especially those who have no cars. Workers at public transport oppose the new measures and the work relocation, taxi owners the opening of their profession. The chairman of Taxi owners Confederation (SATA) criticized the (privatized) KTEL for transporting passengers to and from the Athens Airport Eleftherios Venizelos for ticket price of 5 euro.


Greece: List of new austerity measures

May 2, 2010 at 16:30 ·

In order to receive the biggest bailout in history valued at €110 billion to unburden the nation’s economy, Greece passed the following measures in principle at a May 6 session, during which three PASOK MPs were expelled and Dora Bakoyianni was thrown out of New Democracy for voting ‘yes’ against populist lines.

Additional austerity measures announced November 2010 included further VAT hikes effective January 2011, after Eurostat figures were again revised up to 15.4 percent of GDP and an audit revealed Greece had not met revenue goals.

The list below refers to the second round of austerity measures from May 2010. A third set of austerity measures took effect January 1, 2011, and a fourth round is expected July 2011 because of Greece’s continued failure to collect millions from tax evaders and a 2010 deficit of 10.5 percent of GDP.

In Greek, it is simply called “Μνημονίο” (Mnimonio) or the Memorandum.

*Article last updated July 31, 2011. New austerity measures for July 2011 are still being revised and debated by Parliament, and a new list will be linked here when finalized.

Have they been done?

Since publishing this list in May 2010, people wonder if these measures have been carried out as promised or if Greece is (again) dragging its feet.

Where known, I’ve added a checkmark (√) for items completed. In some cases, it is unclear because parameters have been announced, revoked and revised dozens of times, and implementation does not always go forward after official publication or is changed when the EU-IMF audit team isn’t looking.

Public sector

All reductions in salaries, benefits and allowances apply to members of Parliament, government officials and civil servants.

√ • Cut the 13th and 14th ‘doro’ for all public sector employees earning a gross minimum salary of €3,000/month. Anyone earning below €3000 will receive €250 for Easter, €250 for summer and €500 at Christmas. If you do not understand what ‘doro’ means, read “Christmas doro” which explains that these are not bonuses, gifts or extra salaries. Foreign correspondents outside Greece nearly always get it wrong.

√ • Reduce allowances by 8-20 percent in the public sector and 3 percent in the wider public sector (utilities, etc.).

• Establish a uniform pay-scale from 2011

√ (so far) • Freeze all public sector salaries until 2014

Private sector

A collective agreement signed July 15 ensures that private sector employees in Greece continue to receive their annual salaries in 14 payments, with the 13th and 14th ‘doro’ staying separate and not re-incorporated to 12 payments as originally proposed. There will be no inflationary raise for 2010 and only a 1.5-1.7 percent increase for 2011 and 2012, well below actual inflation currently running at 5.6 percent and rising.

√ • Assess one-time tax to companies showing a minimum profit of €100,000 from 2009:
– 100,000 – 300,000: 4 percent
– 300,001 – 1,000,000: 6 percent
– 1,000,001 – 5,000,000: 8 percent
– 5,000,001 + : 10 percent

√ • Raise lawful redundancy rate, making it possible for employers to reduce staff
– Up to 20 employees: No limit
– Between 20-150 employees: Up to six dismissals a month
– More than 150 employees: Up to 5 percent of staff or 30 dismissals a month

√ • Reduce severance pay, which would also be paid in bimonthly installments instead of a lump-sum

√ • Shorten the lawful termination notice period from 24 months to one to four months

√ • Young people up to age 21 can qualify for a one-year contract at 80 percent (592 euros) the minimum wage & IKA contributions, then be integrated with OAED programs upon termination. Effective July 1, 2011.

• Young people between the age of 15-18 can be hired for 70 percent the minimum wage, which is 518 euros.

• Redundant employees can no longer contest dismissal unless ex-employer agrees

√ • First-time employees under age 25 would be paid less than minimum wage

• Self-employed with OAEE, aged 30-65, without work for any reason are covered by insurance for two (2) years as long as they: a) Worked a minimum of 600 days, plus 120 days for every year over the age of 30 until reaching 4500 days or 15 years of work; b) are not insured by public sector insurance carrier.

√ • Open “closed professions” by July 7, 2010. Finally done on July 2, 2011, a year late, but it was done hastily and without clear parameters so people are confused, and concessions were made to certain industries.

√ • Cancel second installment of solidarity payments

• IKA contributions by employer and employee to increase 3 percent from 2011.


Note that an overhaul of the pension system had been discussed and outlined well before IMF intervention but was never implemented. Greece has a disproportionate aging population with 2.6 million pensioners, a work force of only 4.4 million and a total population of 11.2 million, causing the state to take loans to keep pace with monthly payments. This was exacerbated when tens of thousands took retirement before new retirement rules were implemented. It is estimated that 86 percent of the population will be financially dependent on the Greek state by 2060 (frightening), unless economic productivity, birth and immigration rates increase significantly.

On July 8, 2010, Parliament passed pension reform in principle, after the bill had been amended 50 times. A summary of the main changes are below, but you are free to view all 77 articles in Greek: “Άρθρο προς άρθρο το νέο ασφαλιστικό.”

√ • Cut the 13th and 14th ‘doro’ for all pensioners collecting a gross minimum payment of €2,500/month. Anyone earning below €2,500 will receive €200 for Easter, €200 for summer and €400 for Christmas.

√ • Cut the 13th and 14th ‘doro’ and allowances for all pensioners aged under 60, except for exceptions that include minimum number of contribution years being met and/or having children under 18 or students up to age 24 in household.

√ (so far) • Greek pensions frozen through 2013.

√ • Calculate pension payments based on average over entire course of working life; those qualifying under the old and new system will receive pensions based on the old system through 2010 and on the new system from 2011-2014. In 2015, the minimum pension system will take effect.

√ • Equalize general retirement age for men and women in both private & public sectors, announced as 65. Not done until 2011 and conditions keep changing.

√ • Increase retirement age according to life expectancy, starting 2020, and will apply to all sectors and classifications.

√ (so far) • People may retire at 60 with reduced pensions calculated at 6 percent penalty per year; or at 65 with a full pension after 40 years of work (not 37 years). Starting 2015, no one under 60 can retire early.

• Workers classified in “heavy” industries or “dangerous professions” can retire at 60 (not 55), starting January 2011.

√ • Reinstate LAFKA, which will assess a solidarity levy of 3-9 percent on pensions more than €1400, starting August 1, 2010.
– 1401-1700: 3 percent
– 1701-2300: 5 percent
– 2301-2900: 7 percent
– 2901-3200: 8 percent
– 3201-3500: 9 percent
– More than 3500: 10 percent

• People working ‘dangerous’ or ‘heavy’ professions will see the retirement age rise from 55 to 58 60, starting 2011. (Amended July 15, 2010).

√ • Raise retirement age for working mothers:
– In private sector: To 55 (not 50) in 2011, age 60 in 2012 and age 65 in 2013.
– In public sector: To age 53 in 2011, age 56 in 2012, age 59 in 2013, age 62 in 2014 and age 65 in 2015.
– With three children: Can retire at age 50 in 2011, age 55 in 2012 and age 60 in 2013.

• Revoke pension of any civil servant younger than 55, who is caught working; cut pension of any civil servant, aged 55 or older, by 70 percent if caught working and pension is more than €850/month. Starting 2011.

√ • Limit the transfer of pensions from father/mother to children, according to age and income criteria, which includes payments to 26,000 unwed/divorced daughters of bank or civil servant employees; if children are eligible to receive a two-pension transfer, only the highest will be paid from 2011.

√ • Full pensions can be transferred to widows if death occurred after five years of marriage, he/she is over 50 and income criteria are met. However, payments will be held for first three years after date of death.

• Establish guaranteed minimum pension of €360, then add qualifying income and contributions for everyone over age of 65. Starting 2015, not 2018. Increase to be determined by GDP, inflation and consumer price index from 2014.

√ • Pension will not exceed 65 percent of one’s monthly income while working. Previously, Greeks could retire on 96 percent of their salary based on the last and highest paid years of work.

√ • Uninsured can qualify for a minimum pension if he/she is 65, meets income criteria and lived in Greece for 15 years.

• Merge Greece’s 13 pension funds into three unified funds by 2018 for salaried workers, farmers and self-employed; public sector workers will be integrated into IKA by 2013

• Reduce the number of insurance funds serving lawyers, engineers, journalists and doctors.

√ • Complete revision of Greek military armed/security forces, including raising the number of years required to qualify, removing special bonuses and benefits. See “Χακί συντάξεις στα 35 χρόνια υπηρεσίας.”


These tax increases took effect July 1, 2010, except where noted.

√ • VAT: All VAT rates were increased 10 percent, so 5 percent is 5.5 percent on books/newspapers; 10 percent is now 11 percent for food; and 21 percent is now 23 percent on goods and services. See “VAT in Greece” to understand what tax is assessed to which items.

√ • “Sin” tax: All tobacco, alcohol and fuel now subject to an additional 10 percent tax. This is the third increase since January 2010.

√ • Tax on luxury cars (new/used): Calculation of 10-40 percent tax is based on factory and market value. See “Νέο χαράτσι σε καινούρια και μεταχειρισμένα Ι.Χ.” for details and examples. As of August 2011, there has been talk of revoking this measure because it didn’t raise the revenue expected and is hurting several industries.

• TV advertising: All TV advertisements are subject to a 20 percent tax, postponed to 2013 starting October 2010.

• Online ad tax of 21.5 percent to fund online journalists not covered by a fund thanks to a loophole (withdrawn)

√ • New withholding tax applies from May 1, 2010 on both private and public sector salaries

√ • Special levy of 1 percent assessed to 50,000 individuals (marital status irrelevant) claiming a net income of 100,000 or more. Notices were sent June 2010. Those who didn’t pay are now facing possible jail time as of August 1, 2011.


“Greek lawmakers to debate austerity bill Tuesday” – WSJ (link removed)
“Greeks hit by new wave of austerity” — Reuters
“Συντάξεις: δεκάλογος ανατροπών” — Ta Nea
“Χάνουν τα δώρα συνταξιούχοι κάτω των 60 ετών” — Eleftherotypia
“Μαχαίρι σε μισθούς και συντάξεις” — Ta Nea
“Μέτρα-σοκ ύψους 30 δισ. ευρώ” — Eleftherotypia
“Καταργούνται δώρα-επιδόματα των βουλευτών” — Ta Nea
“Πως θα υπολογιστεί η έκτακτη εισφορά στις επιχειρήσεις” — Eleftherotypia
“Η λίστα με τα νέα μέτρα” — Ta Nea
“Ειδικός φόρος 20% στις τηλεοπτικές διαφημίσεις” — Eleftherotypia
“Greece’s new austerity measures to qualify for bailout” — Reuters
“Τέλος και για 15.000 ανύπαντρες «κληρονόμους» συντάξεων” — Eleftherotypia
“Οι νέες τιμές σε ποτά – τσιγάρα – καπνό” — Eleftherotypia
“«Εδώ και τώρα» οι ανατιμήσεις σε βενζίνες, ποτά, τσιγάρα, Ι.Χ.” — Eleftherotypia
“Ένα προς ενα τα άρθρα του νομοσχεδίου για τα νέα μέτρα” — Eleftherotypia
“EU ministers agree to €500 billion emergency fund to save euro” — Guardian
“IMF approves €30 billion as part of biggest bailout in history” — Reuters
“Οι 8 πληγές του Μνημονίου” (Charts) — Eleftherotypia
“Κανένας πριν από τα 60 στη σύνταξη μετά το 2015” — Ta Nea
“«Ψαλίδι» 5 δισ. ευρώ ετησίως στις συντάξεις με διαφορικές εξισώσεις” — Eleftherotypia
“Greek cabinet approves pension reforms” — WSJ
“Όλες οι αλλαγές στο Ασφαλιστικό” (Charts: Examples of IKA/OAEE pension calculations) — Eleftherotypia
“Greece’s pension reform bill” — Reuters
“Tougher pension reform unveiled” — Kathimerini
“Ανώτατη σύνταξη με 40 χρόνια” (Charts) — Ta Nea
“Ψαλίδι στις πρόωρες και τις επικουρικές” — Ta Nea
“«Ολοι στα 65 από το 2015» ζητεί η τρόικα” — Ta Nea
“Αναδρομικά από 1η Μαΐου οι αλλαγές σε μισθούς και συντάξεις” — Eleftherotypia
“Νέο σοκ στις συντάξεις” — Ta Nea
“Λυπητερή για 50.000 «έχοντες»” — Ta Nea
“Και νέο μαχαίρι σε μισθούς – συντάξεις” — Ta Nea
“Τριπλό ψαλίδι στις συντάξεις” — Eleftherotypia
“Ο χάρτης των ανατροπών” — Ta Nea
“Περισσότερες απολύσεις – λιγότερες αποζημιώσεις” — Ta Nea
“Στο «απόσπασμα» οι γυναίκες (Changes pertaining to women)” –Eleftherotypia
“Greece to ease restrictions on layoffs and severance pay” — Forbes/AP (link removed)
“Unwed daughters catch time bomb in pension overhaul” — Bloomberg
“Factbox: Greece prepares pension overhaul” — Reuters
“Greece Sends Pension Overhaul to Parliament as Strike Looms” — Bloomberg
“Τα νέα όρια συνταξιοδότησης” — Ta Nea
“Σύνταξη στα 65 για όλες τις μητέρες” — Ta Nea
“Greece Backs Down from Online Ad Tax” — NY Times
“EC threatens to sue Greece for not opening closed professions by July 7” — eKathimerini
“Συμφωνία για αυξήσεις κόντρα στο μνημόνιο” — Ta Nea
“Parliament passes laws on salary raises, audits, advertising” — ANA-MPA

Credit link:

IMF warns Greece to cut deeper as default threatens

The IMF gave Greece an ultimatum on Monday to ramp up budget austerity to win rescue funds and avert bankruptcy and eurozone turmoil early next month.

A protestor sets fire to copies of euro banknotes outside the Bank of Greece at the weekend. The IMF gave Greece an ultimatum to introduce more budget austerity to win the release of rescue funds and escape bankruptcy early next month.
The IMF criticised Greece for wasting time, being behind target with privatisation and for allowing reform momentum to slow down.

But it also forecast that the recession-hit economy will recover from wave after wave of crisis cutbacks and tax rises in 2013.

The International Monetary Fund’s representative to Greece, Bob Traa, said that more budget action was necessary.

“The privatisation is behind schedule because politicians can’t agree how to do it. If you wait … the country will go to a default,” he warned.

He also called for urgent reforms to tax administration.

“Additional measures will be needed in order to reduce the budget deficit,” Traa told a symposium.

“It is no secret that the (rescue) programme is at a difficult moment,” he said, adding that the Greek economy was likely to contract by 5.5 percent of output in 2011 and 2.5 percent on average in 2012.

European stock markets again fell sharply in response to inconclusive weekend EU talks in Poland on the eurozone crisis and signs of economic slowdown in Europe and the United States.

There is widespread speculation on financial markets that Greece risks not only bankruptcy but also departure from the eurozone, a possibility which would create chaos but which is strongly rejected by EU mainstays Germany and France.

Chart showing quarterly changes in GDP in the eurozone. The United States clashed Friday with Europe, warning of “catastrophic risks” to financial markets by the failure to quickly contain the eurozone debt crisis.
Greece has come under much EU criticism for tax evasion and poor tax collection and Traa said that urgent reform of tax administration was needed.

He said that time had been wasted since November and that IMF-EU audits of Greek finances and progress on reforms should perhaps be held on a monthly rather than the current quarterly basis.

“Even with the drama, things are slowing, so maybe we should come back every month,” he said.

But he also warned the government against constantly raising new taxes.

Greek Finance Minister Evangelos Venizelos admitted that the coming week would be “very difficult” for the eurozone as well as for Greece.

The IMF warning is a strong signal that auditors from the International Monetary Fund, European Union and European Central Bank are not ready to approve the next slice of funding under a first rescue for Greece.

The auditors left Greece unexpectedly part way through their work, and the resumption of contacts with top EU and IMF officials on the audit was being held by teleconference on Monday, and even that was delayed.

Greek ministers were then to meet on what Venizelos described as new “concrete” measures.

Greek media reports suggest that the country, already shell shocked after two years of constant crisis since the incoming Socialist government admitted that growth and debt figures were false, is about to be hit with more measures totalling about 4.0 billion euros.

Greek Finance Minister Evangelos Venizelos (left) speaks next to the IMF’s Senior Resident Representative in Athens Bob Traa during an Economist conference. The IMF gave Greece an ultimatum to introduce more budget austerity to win the release of rescue funds and escape bankruptcy early next month.
A senior official source said on Sunday that ministries had been told of 15 conditions from the EU and IMF, including layoffs in public bodies, a freeze on pensions between now and 2015 and the closure of about 30 public organisations.

Last week, under acute pressure to make up a shortfall of 2.0 billion euros ($2.8 billion dollars) under its rescue regime, Greece announced new measures including a controversial property tax.

The country, which won a first EU-IMF rescue totalling 110 billion euros in May 2010, has missed financial and privatisation conditions.

Amid signs that some EU decision makers are losing patience, Greece is fighting at the last minute to win approval for the next slice of 8.0 billion euros from that rescue to meet debt repayments, pay pensions and keep hospitals and other public services running.

On July 21 this year, the EU and IMF admitted that in any case Greece would not be able to rise above its debt now exceeding 350 billion euros.

They announced a complex framework for private creditors to take big losses under a second rescue of 159 billion euros. But this is being held up by arguments within the eurozone about guarantees and even the feasibility of the bailout.

Greece has signalled that it has enough money to keep going until sometime next month.

Some top EU officials have warned that the eurozone crisis could wreck the European Union, the United States has warned that it poses a “catastrophic” risk to financial markets, and France said after the July 21 meeting that the way forward lay in a big step towards economic government of the European Union.

Also on Monday, German central bank chief Jens Weidmann said that while measures to solve the eurozone debt crisis were justifiable in the short term, they could weaken incentives for sound public finances.

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