By: DailyForex.com
The most recent set of austerity measures has passed the Greek parliament – just: the bill was passed with a wafer-thin majority of three votes. Clearly, there is as much dissatisfaction with the endless diet of cuts and tax rises in parliament as there is outside.
The latest measures seek to claw back €13.5 billion through a mixture of spending cuts and tax increases. These include an increase in the pensionable age from 65 to 67; pension cuts of between 5 and 15%; reduction in public sector worker salaries and in the minimum wage; reduction of holiday benefits; reduction of 35% to severance pay and a reduction of the notice period for redundancy from six to four months. Commenting on the package, Greek Prime minister, Antonio Samaras noted: "Many of these measures are fair and should have been taken years ago, without anyone asking us to. Others are unfair - cutting wages and salaries - and there is no point in dressing this up as something else."
The package is the fourth such set of austerity measures imposed on the Greek people in the last three years. Greek politicians had little choice but to pass it since were the bill to fail, the next tranche of IMF/EU bailout funding would be in serious jeopardy, threatening Greece with imminent bankruptcy (as early as next Thursday). The bailout had conditions attached to it that sought to reduce the Greek deficit and put its economy on a more competitive footing – if the Greeks wish to receive the next disbursement, progress needs to be seen to be made.
The next hurdle is that a revised budget must be passed on Sunday. If this happens, Eurozone finance ministers will be able to release the next tranche of €31.5 billion when they meet next week. The measures have seen popular protests on the streets and strike action, but it would seem that Greece has no other course of action to take that would represent a viable alternative.