by Nikos Countis
The governmental majority in the Greek Parliament (SYRIZA-ANEL) is ready to vote in favor of the austerity measures that will give the green light to the Eurogroup to conclude the 2nd review of the 3rd Greek Macroeconomic Adjustment Program.
The main characteristic of the conclusion of the Review is the agreement between the creditors and the Greek government about the medium-run primary surplus goals. Contrary to what the Greek government had supported in the past, the primary surplus goals of 3.5% of GDP will have to be retained until 2021. That is after the formal completion of the 3rd Greek Program that ends in 2018.
The conclusion of the 2nd review will impose to the Greek society new austerity measures of 5.3 billion euros, on top of the already legislated (and some of them already implemented) measures of 8.6 billion euros from the 1st Review and the August 2015 Program. In total, for the period 2015-2021, the 3rd Greek Program would have imposed 14 billion euros of austerity measures.
In particular, the 2nd Review includes*:
- Reduction of the tax-free limit from 8.636 euros to 5.681. A measure that will affect the poorest employees and pensioners, since even those who are paid 474 euros per month will be taxed.
- Average pension cuts of 9%, which may reach 18%, for pensions over 1000 euros. From these two measures, pensioners will lose 2 out of 12 pensions each year.
- Reduction of unemployment benefits (which today are received by merely 12% of the unemployed), poverty, child and natural disaster benefits. Those affected will be the poorest habitants of the country.
- Retail shops opening for 32 Sundays. A measure which Finance Minister P. Papadimitriou described as “modernizing” effectively equating modernization with neo-liberal deregulation of the working relations and making clear that SYRIZA has been transformed completely. Against the implementation of this measure, the Trade Union and the Confederation of Small and Medium Size Businesses have already called for a strike.
- Collective dismissals are made easier by abolishing the requirement of ministerial decisions and vetoes for dismissing more than 5% of the total staff. A system of early warning by the employers will be enough, now.
- A reduction in the numbers of contract workers of the public sector from 49.448 on December 2016 to 49.104 at December 2017 and 48.420 at December 2019. This will result in the further dissolution of the public services.
- Acceleration of the privatization plan in order to achieve the goal of 5 bn euros for the period 2017-2021 (Public Power Corporation, Hellenic Petroleum, Greek Gas Company-DEPA, Athens and Thessaloniki Water Supply Facilities, Greek Telecommunications, Athens Airport, Athens Transportation Companies, Greek Railway Infrastructure, Greek Industry of Vehicles, Athens Vegetable & Meat Markets).
- Increases of the social security contributions for freelancers and farmers, by 36% and 30% respectively.
- Restriction of the criminal liability of those bankers who will sell Non-Performing-Loans (NPLs) to distressed funds,
The Greek Government has politically invested on the “counter-measures”, which is a bundle of economic measures that could reduce a little bit the negative impact of the massive austerity that SYRIZA and ANEL have implemented. However, it is almost impossible for the Greek government to implement in the future these counter-measures, since their activation is conditional on a) the over achievement of the primary surplus goals, above 3.5% of GDP, and b) the agreement of IMF about the sustainability of the primary surplus goals.
The impact of the SYRIZA-ANEL austerity program on the Greek economy is catastrophic. The last quarter of the 2016 budget year closed with GDP reduction of 1.1%. The first quarter of 2017 starts with 0.5% GDP reduction and the Greek government had to revise the forecast for 2017 growth from 2.7% to 1.8% of GDP.
It is more than obvious that the 3rd Greek Program has no economic difference from the previous programs. The only difference is a political one. This time, austerity, privatizations, flexible labor relations, the TINA (There-Is-No-Alternative) agenda, are implemented in the name of the Left.
* Leonidas Vatikiotis, Greece: Back to the Future of Austerity and Debtocracy