The deal is on the table
In exchange for the new loan agreement, the Troika is asking the Greek government for cuts in supplementary pensions of 150 euros or more, in order not to affect the main pensions. The meeting of PM Lucas Papademos with the envoys of our lenders, with the participation of finance minister Evangelos Venizelos and labour minister George Koutroumanis, ended at 3 am in the morning.
They discussed the issues of labor reforms, with the Troika asking for harsh measures for flexibility in the labor market in the private sector. A question still remains as to the attitude of the political parties towards the new agreement.
Where the government and the Troika ended up
Regarding supplementary pensions, a high-ranking government official said:
- while initially the Troika called for 2.1-billion cuts in supplementary pensions and social benefits, we arrived at 600 million
- the basic scenario provides for a decrease of 15% in supplementary pensions of 150 euros or more. So it saves 450 of the 600 million euros which could have stopped the Troika’s pressure
- Concerning Samaras’ proposal not to touch supplementary pensions below 300 euros, the financial benefit reaches only 38 million. If an interim proposal were to be accepted for cuts to supplementary pensions of 200 euros or more, then the government would save just 107 million
- in both latter cases, the Troika requires additional cuts in major pensions, so the total annual benefit could reach 500-600 million euros
- if the main pensions are affected, the Troika’s proposal is to start the cuts at 1,000 euros and upwards
If there is no agreement on the size of the cuts in supplementary pensions, the Ttroika is reportedly asking for the equivalent in major cuts in pensions of beneficiaries, possibly not only at the highest levels but throughout the entire spectrum.
In relation to labour in the private sector, there is optimism that "we may win the continuance of the minimum wage and basic benefits of sectoral agreements." The same sources noted that:
- there was a 20% decrease to the minimum wage of 750 euros for newcomers, and it now reaches 600
- bonuses are not affected
- if we were to lose the continuance, decreases would reach 30-40% in some cases
As it was revealed, the Troika pressed for even more brutal forms of flexible labour. Among other things, they requested new personnel regulations on SOEs and banks and for part-time employment to be a "management right".
Moments before, the Troika meeting with Ev. Venizelos showed that a gap remained between the demands of our partners and the Greek side, which led the Finance minister to making an ultimate appeal for everyone to come together along a common line, admitting that it will require sacrifices in exchange for support to our country on the part of Europe, and of course our stay in the euro. It is characteristic that as reported by protothema.gr, Venizelos said on Monday evening: "We close front and another one opens. The negotiation is very difficult, the sacrifices required for the new loan agreement are huge, but will be greater for the people if we deafult."
After the last meeting of the PM with troika, attention now focuses on the current meeting of political leaders with the PM. As reported earlier on Monday by protothema.gr there might be a meeting of the Troika with Papandreou, Samaras and Karatzaferis.
It is also possible that the leaders will have a teleconference meeting with EC president Jose Barroso, ECB president Mario Draghi and IMF general director Christine Lagarde.
According to protothema.gr information, the leaders asked Papademos to prepare a report about the effect of default on society, so they can have the arguments to pass the package they agreed upon on Sunday to the Greek people and their parliamentary groups:
- private sector wage cuts at 22%, in all wages not just the minimum
- supplementary pension cuts and layoffs in the public sector
- elimination of collective contracts in SOEs, and of all the sectorals
- retaining bonuses and special wage lists until the next review in June
- new collection measures of 3bil euros, yet to be defined. Troika wants to define them and include them in the text to be signed by the leaders
- strengthening banks with common shares as exchange, but without the public appointing administrations.
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