Greece unveils pension and labour reform plans
The Greek government today proposed sweeping pension and labour market reforms which would raise the retirement age and make redundancies cheaper.
The move sparked angry reactions from unions which have called a new general strike next week.
Labour Minister Andreas Loverdos said the legislation would make the debt-ridden country's pension system more rational and ensure its long-term viability.
"These reforms are absolutely necessary for the country and people paying social security and pension contributions," he told a news conference. "Our system had collapsed, and we have to rebuild it."
The proposed changes include raising the retirement age to 65 for everyone - up from 60 for women - and sets the necessary contribution years for a full pension at 40. Now, some Greeks can retire on a full pension with 35 years' contributions.
The law also would scrap two extra pensions which Greeks have received for decades, replacing them with a flat €800 payment for retirees at the lower end of the scale.
In the midst of a crippling debt and deficit crisis which hammered the euro and shocked global markets, Greece narrowly avoided defaulting on its debts last month, using the first instalment of a joint European Union and International Monetary Fund loan package worth €110bn.
Prime Minister George Papandreou said today that the package was "the largest in history, not only for Greece but in the whole world".
In return, Mr Papandreou's centre-left government undertook painful spending cuts, slashing pensions and civil service pay, and raising consumer taxes. It also pledged to reform the pension and labour system, and privatise state assets.
Mr Loverdos said the draft law, if approved in Parliament, would raise pension spending from 12.5% of gross domestic product to 15.5% in 2060. The government says that without action pensions would come to absorb 24% of GDP by 2050.
Parliamentary approval could be difficult, however, as several politicians among the governing Socialists have voiced reservations and could undermine the party's majority of 157 in the 300-seat assembly. Mr Papandreou has already expelled three deputies who failed to support the austerity package last month.
The draft law also lets companies sack employees with up to six months of warning, rather than the 24-month warning workers get now. Sacked employees who receive warning would also be entitled to half the compensation provided to those laid off suddenly.
Companies employing more than 150 would be allowed to fire 5% of the workforce every month, up from the current 2%. Smaller companies would be able to lay off up to six workers.
Unions have rejected the proposals, calling them unfair and possibly unconstitutional, and called a general strike for next Tuesday - the day a parliamentary committee begins debating the legislation.
Protests at previous strikes have turned violent. Three workers died on May 5 in a bank torched by rioters.
The Adedy civil servant umbrella union said today that the pension reforms would "slaughter fundamental social security rights for existing pensioners and workers".
Adedy said the proposals, if implemented, would raise retirement ages by up to 15 years for some workers, and particularly hurt women as they also bear the burden of caring for children and elderly relatives in the absence of basic state-provided social services.
Unions also have said the reforms would encourage layoffs at a time of high unemployment, which reached 11.6% in March.
