Monday, 24 May 2010

Some of the insane demands on Greece

Although Greece is in a difficult situation, the demands by its would be saviours are far and wide, extending far beyond the need for budget cuts.

The latest measures demanded by the coalition of lenders is a radical change of the pension plan of Greece. Although change is evidently needed, the demanded goals are far in excess of what exists in either Germany or even the United states. The Papadreou government is trying to mollify the changes, but it can do little as it is in not position to negotiate.

The demand for the pension system is that people can only retire in full pension after 40 (!) years of work. The pension they will get will be based on the average salary over their life time and not on the much higher final salary. In addition they will loose 6% for every year they work less than 40. As my wife pointed out, only the poor children selling tissues in the street of athens, who work when they are 12 or 15, will be able to retire at a decent age.

The international lenders also demand an end to all collective wage negotiation, despite the fact such collective negotiation has been in the past very effective way in moderating wage demands. This will turn any protests in Greece ever more explosive, with the possibility of the shipping and hotel sector being crippled by strikes during the crucial summer period.

In addition the minimum wage is to be reduced from 740 euro to 600 euro and new employees could be saked without compensation for the first 18 months of employment.
A classic case of the cure being worse than the illness, A rapid default would have been better for Greece- it is now being forced to dismantle all of its welfare system, leaving most of the population worse off.

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