The Radical Left Coalition (SYRIZA) government has retreated on a number of issues concerning labor, social security and privatization in the hope of clenching a deal with international creditors, however there is further pressure for the government to bow to demands such as further pension cuts, wage slices and mass dismissals.
The ‘bitter pill’ is next to impossible bearing in mind the size of the average Greek pensions and salaries. For this reason, the political negotiation team met until late on Wednesday to propose alternative measures, such as:
– pension cuts to clerks (e.g. banks, public utilities) prior to the age of 60 years, however the early retirement packages will continue to apply to employees of heavy professions that will apply after 40 years of work regardless of the retirement age.
– cuts to the 13th pension with the thought of giving part of the amount (e.g. for a pensioner who earns 600 euros per month, there will be a 13th pension of 400 euros.)
– further cuts to auxiliary pensions, but only to relatively high pensions.
– delays to the regulation concerning foreclosures on the provision that the Council of Ministers agrees to this.
Following an announcement after midnight, the Ministry of Finance insists on keeping ‘red lines’ such as VAT on islands, auxiliary pensions, labor matters and the selling of public assets. Nonetheless, the government is flexible in securing an honorable interim agreement.
Tax measures
1. Increased tax surveillance
2. Tax amnesty for evaders (e.g. on the Lagarde list etc) who will be given amnesty provided they pay up as is the case in Germany
3. 10-year tax audits
4. Independence for the General Secretariat of Public Revenue to no longer be answerable to the Ministry of Finance
5. Electronic cards for transactions over 70 euros on islands with populations over 3,100 people
6. Special accomodation tax during the tourist period (April – October) for a specific number of stays in specific areas and with specific lodgings
7. Changes to the penal code so that VAT evasion becomes a crime
8. 10-13% contribution to luxury items such as cars, yachts, swimming pools
9. Bonuses for honest and consistent taxpayers
10. Incentives for capital abroad to be returned to Greece
Privatization
A list of privatization will be created to include the Port of Piraeus, Port of Thessaloniki (with a change in the contract to 51% rather than 67%) as well as the Greek railway and LARCO (ferronickel producers). Privatization of regional ports and airports are up for discussion, however a catalogue of public utilities not being considered include the Public Power Corporation, the Athens Water Supply and Sewerage Company (EYDAP) and the Thessaloniki Water Supply and Sewerage Company (EYATH). The former Elliniko airport may also not be negotiable for privatization.
Labor / Social Security
1. A return to collective negotiations so that there is no fiscal cost, however it may have an affect on the private sector. A government source said that the ILO and OECD are being called to help in improvements to the employment sector.
2. If necessary, there will be 2-3 heavy professions listed. Only these would be privy to early retirement before the age of 60 years.
3. The 13th wage is up for discussion.
4. If necessary, auxiliary pensions over 300 euros may be cut.
