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Stournaras Says Budget Deal Reached

October 24, 2012 Greek Reporter
Less than a day after the partners in Greece’s coalition government objected to changes in labor rights as part of a pending $17.45 billion spending cut and tax hike plan pushed by Prime Minister Antonis Samaras, there has reportedly been a compromise agreement.

Finance Minister Yiannis Stournaras told journalists a deal had been agreed with PASOK Socialist chief Evangelos Venizelos and Democratic Left head Fotis Kouvelis and with international lenders, with the package set to go before the government-controlled Parliament by the end of the week, the newspaper Kathimerini said.

The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) has been withholding a $38.8 billion loan installment until a deal had been reached that would impose more austerity measures, despite growing social unrest.

The pay cuts, tax hikes and slashed pensions implemented since 2010 have worsened the country’s five-year recession, put nearly two million people out of work and is shrinking the economy by 7 percent but the Troika insisted on more to insure banks and investors would get paid back the $325 billion in two rescue loan packages being put up to save Greece.

“The package has been sealed,” Stournaras said. Kouvelis had vowed not to support changes in labor laws, and Venizelos expressed reservations but both gave in to compromises, it was reported.

Sources said that instead of reducing the notice companies have to give to employees before making them redundant from six to three months, a compromise has been reached on four months. Democratic Left had also objected to a restrictive cap on compensation for workers who are fired when they have at least 16 years of service.

It appears it has been agreed that employees’ compensation for their first 16 years of service will be paid according to their salary, while the remaining years will be capped at 2,000 euros per year, which is higher than the Troika originally proposed. Greece’s lenders have also agreed to maintain a benefit for married couples and have set aside for now a request to scrap the automatic three-year wage maturation for workers on the minimum wage.

Stournaras said that Greece would inform Eurozone leaders of the status of negotiations when technical staff meet in Brussels on Oct. 26 and Oct. 29, ahead of the next meeting on Nov. 12. Samaras said he wanted to present the 2013-14 budget plan by then because he said Greece would run out of money by Nov. 16.
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