Bloomberg News

Greece Bracing for 24-Hour Strike as 30,000 Jobs May Be Cut

October 04, 2011

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Oct. 4 (Bloomberg) -- Greece will shut airports for a full day for the first time this year as the union representing at least 400,000 state workers plans a 24-hour strike to protest austerity measures aimed at winning European Union rescue funds.

The country’s largest public-sector union, known as ADEDY, called the strike for tomorrow to protest the government’s 6.6 billion euros ($8.7 billion) plan to put 30,000 public workers on reduced pay, raise property taxes and cut pensions and wages. The workers will either retire early or eventually be fired.

The strike, which will force cancellation of flights into and out of the Athens International Airport and school closures, comes after European leaders delayed a decision to release the next 8 billion-euro loan installment in a 110 billion euro bailout until after Oct. 13 as Greece struggles to avert default. The economy contracted 4.5 percent in 2010 and will shrink 5.5 percent this year, Finance Ministry forecasts show.

“We have workers who have had their wages cut by 40 percent and with the new measures it will surpass 50 percent,” ADEDY Chairman Costas Tsikrikas said by phone from Athens. “These measures, and all the measures that have been passed so far, are putting the heaviest weight on workers and pensioners, not on those who earn the most and have sent their money outside Greece to foreign banks.”

Finance Minister Evangelos Venizelos said today that Greece is and will remain a member of the euro area and that there was no discussion of a default at a meeting of regional finance ministers yesterday.

“There is no need for additional measures as long as we are all consistent and organized,” Venizelos said. “If the government mechanisms don’t work, then obviously we may have problems achieving the real goal.”

Bonds Fall

Greece’s 10-year bonds fell today, pushing the yield up to 23.1 percent from 22.6 percent yesterday, according to generic pricing for euro-denominated government securities. The yield has climbed from 16.4 percent on July 21. Greek stocks fell the most since May 2010, as the ASE Index lost 6.3 percent and National Bank of Greece SA dropped 14 percent. Global stocks and commodities retreated as European leaders signaled they may renegotiate terms of Greece’s bailout. The euro has lost about 8 percent since the end of August.

Greece’s government, which employs about 750,000, predicts the nation’s debt load will reach 356.5 billion euros in 2011, or the equivalent of 161.8 percent of gross domestic product, the highest in the European Union and three times the ratio of Poland. Greece’s average unemployment rate is expected to climb to 16.4 percent next year from 15.2 percent in 2011, more than double Germany’s rate, according to ministry forecasts.

Protests at Ministries

State workers staged protests at government buildings in Athens today, including the finance, education, health and culture ministries, in opposition to the government plans, according to an e-mailed statement from ADEDY. Protests also took place at hospitals, schools and city buildings across Greece and demonstrations are planned for tomorrow in central Athens, the statement said.

Air traffic controllers and employees at the Hellenic Civil Aviation Authority will cease work for 24 hours tomorrow, the first all-day work stoppage for aviation workers this year.

Aegean Airlines SA canceled all its flights tomorrow and Olympic Air canceled 89 flights, according to an e-mailed statement from both Athens-based carriers. Schools also will close.

The General Confederation of Labor, or GSEE, the country’s largest private sector union that represents workers at state- run companies and utilities, also will participate in tomorrow’s strike. The two unions have called a general strike for Oct. 19.

Rail Networks

Employees at Hellenic Railways Organization, Greece’s state-run rail company, and the suburban rail network surrounding Athens will also take part. Dockworkers, journalists, health-care and municipal workers plan to join the strike.

Public transit employees will operate tomorrow in order to help carry protesters to central Athens for midday demonstrations and marches to parliament. Transit employees have held a series of 24-hour strikes and work stoppages since Sept. 2 to protest involuntary transfers and wage cuts that were part of an overhaul of the public transit industry adopted last year by Greece’s parliament.

After inspectors from the International Monetary Fund and EU halted a review on Sept. 1, Venizelos introduced measures to plug the budget gap for 2011, including a new property tax approved by parliament on Sept. 27 and further cuts to pensions and wages for state workers.

Europe’s financial leaders are fighting on multiple fronts, trying to repair Greece’s economy while insulating Italy and Spain and shoring up banks that the IMF says face as much as 300 billion euros in credit risks.

Finance ministers are considering reshaping the July deal that foresaw investors contributing 50 billion euros to a 159 billion-euro rescue. That private sector involvement, or PSI, includes debt exchanges and rollovers, targeting bondholder losses of 21 percent.

--Editors: Laura Zelenko, Maria Petrakis.

To contact the reporters on this story: Tom Stoukas in Athens at astoukas@bloomberg.net;

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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