Vol. 73/No. 50      December 28, 2009

The recently elected social-democratic government of the Panhellenic Socialist Movement (PASOK) has vowed to take measures that will deepen the attacks on workers as bosses seek to make them pay for the sharpening financial crisis.

At the beginning of December, the Fitch ratings service downgraded the Greek government's credit, making it more difficult to sell its bonds. The agency pointed to fears that the government's deficit might lead to default on its debt. Standard & Poor’s had already cut Greece’s rating to the lowest in the euro zone.

Seeking to ease those fears Greece's finance minister George Papaconstantinou told the New York Times, "We will reduce the deficit, we will control the debt, and there will be no need for a bailout. We are not Iceland, we are not Dubai." Iceland's government resigned in January in face of an economic collapse. At the end of November Dubai was rocked with fears of default after its six-year real estate bubble burst.

The Greek government has announced that it expects the budget deficit to climb above 12 percent of gross domestic product (GDP), substantially over the 3 percent limit set for countries in the European Union (EU). Greece’s national debt is projected to rise to 135.4 percent of the GDP from 112.6 percent this year, the highest in the EU.

Greek banks have borrowed about 40 billion euros from the European Central Bank (ECB), using Greek government bonds as collateral. The Greek National Bank since the beginning of November increased its investments in these bonds to 18 billion euros.  
 
Construction and shipping
With industrial production continuing to slide, construction and shipping have been hit hardest. In the eight-month period ending in August, construction permits were down 15.8 percent from last year, throwing many, especially immigrant workers, out of a job. Tourism, which accounts for 17 percent of GDP, has also suffered in the last season, according to the Athens News, with revenues dropping by 20 percent.

Nikolaos Efthymiou, president of the Union of Greek Shipowners, complained that they are just making the operating costs and may soon fall below that.

Greek shipping, with tonnage at 16.1 percent of the world’s total, is central to the country's economy. Greek shipping tycoons were also among the tops in the world in ordering newly built ships. Now they are canceling new building contracts.

According to figures released by the Bank of Greece December 1, some 300 workers are losing their jobs every day. The official unemployment rate is 9.9 percent.

The PASOK government has promised the EU it will present “a detailed plan” in January of how it is going to reduce the deficit and public debt.

The government of Prime Minister George Papandreou, which came to power through elections held in early October, plans a range of austerity measures along the lines of the previous conservative New Democratic Party government, reported Athens Plus. Among the expected measures are cuts in social spending, a curb in pay increases for civil servant workers, imposing a freeze on hiring of new government employees, increase in taxes, and raising workers’ retirement age.

The government has so far laid off 20,000 public workers by abolishing an apprenticeship program. Hundreds of these public workers marched in the center of this city December 1 demanding a decent job.  
 
 
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