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Reductions in "bonus pay" cut into income that many civil servants rely on.
Greece's government says it had not choice but many analysts still fear the measures could deepen the country's current recession, causing widespread pain across Greek society.
Konstantinos Michalos, president of the Athens Chamber of Commerce, says Greece needed to make deep cuts to deal with its debt crisis, but he disagrees with the specific measures the government has announced. Instead of an across-the-board pay cut for all civil servants, Michalos said the government could have structured cuts to target higher paid civil servants and brought in more revenue by tackling the widespread tax evasion among the self-employed.
The cuts to public workers’ salaries, along with the 2 percent increase in the value added tax (VAT), he warned, would result lower consumption and could mean a longer, more painful recession for all Greeks.
“There are measures which are absolutely necessary and painful, but the time delay that the government has taken over these measures, and the actual direction of the measures, we feel they’re in the wrong direction,” he said.
While the cuts to bonus payments will only hit public employees, all Greeks will feel the impact of the increase in the VAT from 19 percent to 21 percent, which is applied to most services and goods. Greece’s socialist government had initially resisted raising the tax, fearing that it would have a disproportionate effect on the country’s poorest. But given Greece’s widespread tax evasion, indirect taxes like VAT are the most effective way to raise money quickly.
Most vulnerable to the increases are Greece’s urban poor, like Aris Diamandaras, a 76-year-old pensioner. After working for 45 years as a painter, he now receives a monthly payment of 650 euros, about $885, from a state pension fund. With this, he supports his wife and an adult daughter who graduated from university five years ago with a degree in French philology, but can’t find a job. Like 68 percent of Greeks, he owns his apartment, but even so, his meager pension allows for few luxuries. Under the austerity measures, this year his pension will be frozen. But the increased taxes mean prices will continue to go up.
“The money the government gives us to live is not enough. The prices keep going up, but our pensions stay the same,” he said, worry beads clicking between his fingers. “Sometimes I am desperate, because I don’t see anything getting better in the future.”
As for Papadapoulos, the policeman, he’s unused to the novelty of being cheered by protesters. Usually, they hurl abuse and stones at police. He says he’ll keep protesting, but he has little hope anyone is listening.
“I hope the government will hear us, but I don’t think so,” he said.