Greece mulls harsh new cuts

Business

February 9, 2012

At least 15,000 jobs will be cut in the public sector

THE ASSOCIATED PRESS Associated Press Thu Feb 09, 2012, 07:24 AM EST

LAOS — ATHENS, Greece — Greek coalition leaders were locked in crucial debt talks with the prime minister Wednesday to review layoffs and other steep cutbacks as part of a $170 billion bailout package intended to save the country from a looming bankruptcy.

The coalition met for seven hours without reaching consensus on where the cuts should fall, but eurozone finance ministers scheduled a meeting in Brussels today to discuss the second massive bailout for Greece, an indication a deal was close.

Athens has already accepted a demand to fire up to 15,000 workers in the public sector in 2012, but is under pressure to impose deeper cuts, including reductions in pension payments and the minimum wage. Leaders of three parties making up the 3-month-old Greek coalition have been under intense pressure to accept the new austerity measures.

A disorderly bankruptcy by Greece would likely lead to its exit from the eurozone, a situation that European officials have insisted is impossible because it would hurt other weak countries like Portugal, Ireland and Italy. Two years of cutbacks already have seen unemployment rise to around 19 percent and poverty to 20 percent in Greece, according to data from the EU statistics agency Eurostat.

The coalition's measures were to be announced at a meeting with Prime Minister Lucas Papademos, after the parties were handed a 50-page draft agreement, drawn up with international debt inspectors late Tuesday. It was not clear whether the parties — the majority Socialists, main rival conservatives, and smallwould accept the austerity demands.

, particularly ahead of national elections provisionally set for late April.

"Austerity measures are like shoes that are too tight. Sooner or later, you want to kick them off," LAOS leader George Karatzaferis was quoted as saying by state TV.

Papademos called Jean-Claude Juncker, who heads the finance minister meetings, on Wednesday to relay Greek political parties' reservations about proposed pension cuts, a party official said on condition of anonymity because the talks are ongoing.

Greece's largest labor union, GSEE, said it would meet Thursday to consider calling for new protests against the austerity measures. "They simply don't care that they are causing such damage to the country and such damage to society," said senior GSEE official Stathis Anestis.

Juncker, who is Luxembourg's premier, scheduled the eurozone ministers' meeting for 1700 GMT (noon est).

The coalition talks were repeatedly postponed this week to make time for exhaustive negotiations with representatives of the European Union, the European Central Bank and the International Monetary Fund, on whose approval the continued flow of Greece's vital rescue loans depends.

Without the bailout, Greece would not have enough money to pay off a big bond redemption payment due on March. 20, triggering a default that risks sending shock waves throughout financial markets and the global economy.