Greeks go on strike before austerity budget vote

Pedestrians cross a main street jammed by traffic during a public transport strike in Athens December 20, 2010. Greek public transport, with the exception of city buses, held a 24-hour strike on Monday against reforms in the sector

Greek unions called a general strike today and Athens was paralysed by a 24-hour public transport stoppage in protest against the government’s 2011 budget, set to pass later as part of an EU/IMF bailout.

The budget, meant to help stem a debt crisis that has shaken the euro zone, includes further tax hikes and wage cuts in state-run enterprises, especially in public transport.

Fitch said yesterday it may cut Greece’s credit rating next month to junk as both other major rating agencies have done.




“Even though this news was expected, it will go down badly with the markets, there is widespread fear about downgrades coming,” said Ioanna Telioudi, analyst at HSBC in Athens.

Greece’s main public and private sector labour unions have called a 3-hour strike from 1000 to 1300 GMT in Athens. Thousands are expected to rally outside parliament.

Athens bus and subway drivers have been holding on and off strikes for two weeks, keeping Christmas shoppers from the city centre, adding to the strain of recession-hit retailers.

The government threatened today to break the public transport strikes, invoking emergency legislation it used earlier this year to dissolve labour action by truck drivers and other transport workers.

“Everyone has to show responsibility ... the state has all the powers it needs to protect the public interest,” government spokesman George Petalotis said in a television interview.

Analysts have warned the additional measures will hurt the economy even more without providing guarantees that the country will avoid a debt restructuring to cope with ballooning debt.

The government has a comfortable majority of 156 seats out of 300 in parliament and the budget is expected to be approved despite growing discontent among the ruling PASOK party ranks.

“I am giving the government a last chance,” said PASOK deputy Thomas Robopoulos during the budget debate yesterday. Since the EU/IMF bailout agreement was signed in May, Prime Minister George Papandreou has expelled four deputies for disagreeing publicly with his austerity policies

The socialists, who revealed a gaping budget deficit after coming to power last year, have braved public discontent and taken draconian measures to meet the bailout terms.

The government has cut public sector wages by about 15 per cent, increased the retirement age, frozen pensions, cut public spending but has failed to boost tax collection as much as targeted, despite a hefty VAT increase.

Greece’s lenders have said that the country was broadly on track with its fiscal programme but needed to step up reforms and spending cuts next year.

Partly as a result of the measures, the economy is seen shrinking by 3 per cent next year after a 4.2 per cent drop in 2010, with unemployment jumping to a record 14.6 per cent from an estimated 12.1 per cent this year.

Greece targets a deficit of 7.4 per cent of GDP next year, from about 9.4 per cent this year.

Greek protesters clashed with police last week and set fire to cars and a hotel in central Athens earlier this month, as some 50,000 marched against austerity in the biggest and most violent march since three died in protests in May.