Suffocating Athena: Public Sector Unions Kill Greek Salvation — Again

On October 1, the Greek government unveiled an austerity package that aims to reduce public spending by $15 billion (11.5 billion euros) for 2013-2014, which includes cuts to welfare as well as salaries and pensions of government employees.

The reductions are necessary to receive a 31.5 billion euro installment from the 130 billion euro (second) bailout that has been keeping Greece’s head above the wine-dark sea. The International Monetary Fund, European Commission, and the European Central Bank, collectively referred to as the Troika, have assured that no more money will be given without credible steps being taken to ensure a sound investment.

As necessary as the measures are, unions are pitching a fit at the thought of decreased government funding. Two of Greece’s largest unions called for a 24-hour strike in late September in anticipation of the proposed austerity measure. The General Confederation of Greek Workers (GSEE) and the Civil Servants Confederation (ADEDY), which represent half the nation’s work force, mobilized 50,000 teachers, lawyers, civil workers, and other Greek employees to protest in Athens, promising more to come if the cuts are implemented. This is the third strike this year, but perhaps one of the most significant Greece has had in a while, as it has brought together people of varying political beliefs who collectively oppose austerity.

Union officials want to negotiate with the government for fewer salary and pension reductions, and they don’t seem to care how the government gets the money to pay them. Sotires Martalis, a high school physics teacher in Athens who was on the National Council of the Public Employees Union Federation, spoke to Labor Notes in 2010, claiming:

“The rank and file is so angry,” he said. “Their main idea is ‘we don’t pay for your crisis, not even one euro. Take the money from the rich.’ So the leaders of the federations have had to support and call strikes.”

Greece’s finances are spinning out of control. If nothing is done, public debt could reach 179.3 percent of GDP by next year. But this does not concern unions. They are fighting the austerity measures that could give Greece its first budget surplus in 10 years.

London School of Economics lecturer Spyros Economides feels this is the first real test to see if the prime minister can carry through with the budget cuts in spite of the widespread dissatisfaction. As quoted on, Spyros said:

What happens is that if the pressure becomes immense, then there would be a call for new elections. And then those elections could potentially lead to a new government, perhaps one led by the current major opposition party, who have said quite categorically that if we come to power, we will leave the Eurozone and we will return to the drachma, which in my opinion is the biggest possible catastrophe for Greece right now.

Holding to the austerity measures required to receive the Troika’s loans seem to be Greece’s best bet at an economic turnaround. The country can adhere to the austerity requirements placed upon it by its creditors and accept the loans, or it can reject them and risk returning to its former currency, the drachma.

But that would mean even more economic tragedy for Greece. Evi Pappa, a professor of economics at the European University Institute, Florence, comments in an interview with Al Jazeera:

If Greece leaves the euro, it is going to be disastrous for Greece. I don’t think that there’s going to be any sector that will come out as a winner. Because what is going to happen is, if Greece is going to leave the euro, we will have to go back to some drachma or new drachma, or whatever you want to call it. Greece is going to call for likely repeated devaluations, which can be controlled or uncontrolled depending on who’s going to be in the government. These devaluations are going to be by at least 50 per cent.

A devalued currency would hurt the poor and working class most of all — those living paycheck to paycheck, people who have worked for years to only put away a few thousand Euros. Consider every dollar you have losing half of its value; your home, your car, and your pension being worth half of what it is worth today.

If implemented, the austerity measures will shrink the economy by an estimated 3.8 percent in the short-run, according to The Wall Street Journal. Understandably, the people of Greece are fearful what the proposed austerity could do to their lifestyles. But the alternative would be much more devastating. Unions strike to keep their power and their pensions for the present, but they are inadvertently fighting for a weaker and poorer Greece in the long-run.