Tag Archives: Greek wages

Saving private wages: heroic act or con trick?

Illustration by Manos Symeonakis

If you walk along Adrianou Street, which runs alongside the Acropolis, in Athens you can brighten up your stroll by taking in one of the games of three card monte that often takes place there. It’s entertaining to watch the dealers work with their shills to display wonderful sleight of hand and mesmerizing misdirection as they fool punters. But if confidence tricks are your thing, you might be better off walking a few hundred meters up the road and visiting Parliament because the street hustlers have nothing on Greece’s politicians

Within minutes of PASOK’s George Papandreou, New Democracy’s Antonis Samaras and Popular Orthodox Rally’s  (LAOS) Giorgos Karatzaferis completing their make-or-break talks with Prime Minister Lucas Papademos on Sunday night, statements about battles being fought and rights being salvaged were launched into the Athens night.

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Choose any color you want

There are many reasons why you might not want to be George Papandreou, Antonis Samaras or Giorgos Karatzaferis, but this weekend in particular the leaders of three parties in Greece’s coalition government find themselves in the most unenviable of positions.

They are due to hold talks with Prime Minister Lucas Papademos on the measures that Greece will have to implement to receive further loans from the eurozone and the International Monetary Fund. But the leaders of PASOK, New Democracy and the Popular Orthodox Rally (LAOS) are walking into a lose-lose situation.

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Caution: Falling wages

Illustration by Manos Symeonakis

So this is what it’s come down to. The negotiations over wages in Greece due to take place over the next few days will be a defining moment of this crisis, not because a reduction in the minimum wage or cuts to private sector salaries will make a huge difference to the economy but because it is a test of whether those involved in the process – labor unions, employers, the government and the troika – are prepared to face the truth. It is test of whether someone is willing or able to step forward with some kind of coherent plan.

It doesn’t take long to think of several good reasons why reducing private sector wages during a deep recession seems a suicidal idea. They include the fact that it would further undermine withering domestic demand and likely precipitate the closure of more businesses on top of the 38,000 that have shut down over the last two years. The more fiscally minded might point out that lower wages means lower tax revenues, which has a heightened relevance at the moment given that recent figures showed Greece raised 50 billion euros in revenues in 2011 compared to 50.8 in 2010 despite imposing a raft of new taxes.

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