The latest austerity measures announced by the Greek government this week impose additional pension cuts, raise the number of civil servants to be suspended to 30,000 and lower the threshold at which people start paying income tax by a third to €100 a week. A new property tax on every homeowner regardless of circumstance will be collected through electricity bills: the unemployed, the disabled and pensioners will pay the same rate as the wealthy elite or have their electricity cut off.
Greece is being pushed to its limits and we Greeks are being taken hostage for the rest of our lives. Indignation and despair have swept the country. In response, a 24-hour public sector strike on 5 October will be followed two weeks later on 19 October by a one day general strike called by the Greek General Confederation of Labour (GSEE) and the civil servants’ union ADEDY.
The first year of austerity shows that the medicine is worse than the disease. The conditionality of the EU-IMF loan mechanism traps Greece in a vicious circle where austerity breeds recession, followed by harsher austerity, new taxes and deeper recession. It has failed to put Greece’s finances on a sustainable route, or stabilize the eurozone. It has only produced recession. Clearly, without growth there can no budgetary improvement. On the contrary: unemployment and bankruptcies increase, tax revenue falls and the justified resistance of the people grows.
Ordinary Greeks face a tax tsunami including substantial VAT increases. It is suffocating the low paid, pensioners and other struggling families, yet the government appears unable to broaden the tax base or address tax evasion effectively. Workers are being made to pay for the crisis with each successive announcement.
The latest moves are on top of earlier, drastic budget cutbacks, lower wages, new taxes and a rapid programme of privatizations worth €50 billion: and this may not be the end, if the IMF/EU/ECB troika is not satisfied or – as has happened before, the Greek economy worsens. The harsh, socially unfair measures are a precondition for emergency financial aid from the troika. They strangle any prospect of development and sustainability.
Unemployment is at unprecedented levels. The rate has doubled since 2008 to a fifth – over a million people out of work while 150,000 public jobs will be cut over the next two years. This is pushing Greece back to the 1950s, and it adds €5bn to the social security bill. Half of all young people are unemployed. Women are 50% more likely to be jobless than men, and austerity has widened the gender pay gap to 20%.
Inflationary pressures intensify, demand is falling sharply because of falling wages and small and medium sized enterprises, the backbone of the economy, are being forced into bankruptcy. Productive capacity is being destroyed.
The state’s obligation of social protection to the unemployed has been replaced with a higher than ever compulsory unemployment contribution from wages. Workers facing the threat of unemployment are effectively being asked to dig their own graves.
The austerity measures have been adopted hastily under the pressure of financial markets, without any consultation with the social partners and regardless of the political and social impact. The process of constructive social dialogue has been effectively stalled.
Greece is being turned into a laboratory for the restructuring of workplace and union rights. Industrial relations have been forced back at least two decades.
Over the last 12 months, more than 100 legal provisions have been enacted in a drastic restructuring of the labour market. Greece is being pressed to eliminate sectoral agreements that safeguard workers’ minimum rights and replace them by firm level contracts. Now any employer, under the threat of lay-offs, without giving a reason, can effectively force consent by a union to standards lower than those of the binding sectoral agreements. Equally he can unilaterally convert full–time work contracts to reduced term rotation work, the worst version of flexible employment, accounting for a fifth of all new contracts. Individual contracts are negating the very concept of collective bargaining.
But none of this is for Greece’s benefit. The EU-IMF strategy is designed to rescue eurozone banks from the impact of their irresponsible lending. The Greek debt crisis is surely rooted in domestic flaws. It has, however, become uncontrollable owing to the destructive drive of finance capital to maximize profits by betting on sovereign debt and the inability of the EU to articulate a coherent response.
As lasting social regression looms and bankruptcy beckons, the challenge is to reclaim our economy and our lives, protect workers and assert our role as trade unions.