In Greece, organized labor is stepping up pressure on the government as European Union leaders agree to bail out the country’s struggling economy. The terms of the bailout are still sketchy, but basically, the EU would back Greece’s debts so that it could borrow money at a lower interest rate. The aid is reportedly contingent upon Greece doing “whatever is necessary” to reduce its deficit.
This puts the ostensibly socialist Greek government in a very awkward position. The heavily unionized public sector is not going to take rampant spending cuts lying down.
Public sector workers staged a one-day strike on Wednesday to protest a series of changes aimed at curbing the deficit, including wage and hiring freezes for public servants and an increase in the retirement age. Government offices, schools, universities, airports, and hospitals shut down for the day as 10,000 people demonstrated in Athens. And now labor unrest is spreading beyond the public sector.
The taxi union, Association of Attica Taxi Drivers (SATA), began a 24-hour strike in Athens on Thursday. Similar actions are expected in other cities. The drivers are upset about tax changes proposed by the government.
Meanwhile, Greek farmers continued express their outrage at the government by blocking roads along the border with Bulgaria. The farmers have been manning the blockades for a month.
Predictably, Greece is facing international pressure to slash its public sector to deal with the budget cricis. Greece, population 11 million, has 700,000 “civil servants” and another 300,000 employees of regional governments and public companies. Conservative media outlets favor the term “civil servants” because it sounds as if all these workers were redundant clerks in a bloated bureaucracy.
The label obscures the fact, however, that public servants in Greece include air traffic controllers, hospital doctors, teachers, and other workers. Yesterday’s strike was a reminder of all the work they do.
Rash cuts can make the economy look healthier on paper while sapping an economy’s capacity to produce real wealth. If you doubt this, consider how much private trade depends on public roads, public airports, public education, and so on.
The European Union ultimately wants Greece to get its deficit down to 3% of GDP; it was 13% of GDP last year. So the EU will be monitoring Greece’s spending closely. This rescue plan could turn out to be an unprecedented transfer of sovereignty from an elected government to the EU.
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