Author’s Note: Please take a few minutes and Join the Firedoglake Membership Program today. FDL provides the tools that help me and others extend our reach with our rants so we need to support FDL when we can.
Let me start this by stating right up front that I do not pay near enough attention to happenings around the world and the Greek debt crisis is just one of those issues that I am aware of without really knowing all the ins and outs of the situation.
Nevertheless, I saw a headline this weekend that has me in full on WTF mode. Saturday morning a NY Times headline said “Greek Premier Faces Impasse Over Demand to Cut Private Wages.”:
ATHENS — Lucas Papademos faced his most difficult test as Greece’s interim prime minister on Friday when his three-month-old government reached an impasse over proposed demands by the country’s foreign lenders to reduce private-sector wages drastically in exchange for the aid the country needs to prevent default.
Now, I can understand why lenders would demand wage cuts for Public Sector employees. I can think it is incredibly stupid, short-sighted, and penalizing the wrong group of people but I can understand the logic behind it. But Euro zone leaders and banks requiring private sector wage cuts before restructuring debt for Greece just makes no sense at all.
A bit further down in the article though I do get a small hint here:
It was unclear exactly what sort of wage cuts the troika was demanding. Some news reports said the lenders were seeking changes that would reduce most private-sector salaries by as much as 25 percent; others said the group was insisting on a cut in the minimum wage that, at least directly, would affect fewer than 300,000 people.
The goal of any pay cuts would be to help make Greek workers, who are generally less productive than workers elsewhere in Europe, able to compete more effectively inside the euro zone, where countries share a common currency that does not allow devaluations to help even out differences in labor costs.
My bold. And I think that is the goal right there. Cut minimum wage. Even though (assuming this wiki is correct), the Greek minimum wage works out to roughly $11,454 per annum (compared to the US minimum wage which works to $15,080 per annum – $7.25 per hour x 40 hour week x 52 weeks).
Today, I saw this article from the Wall Street Journal (if the article does not come through completely, check Der Google for the headline “UPDATE:Greece Close To Announcing 20% Cut In Minimum Wages-Sources” to get the full article):
Pressure on Greece has been piling up from its euro-zone partners to accept a new round of painful austerity if the country is to get a EUR130 billion bailout loan that will keep the country from defaulting next month when EUR14.4 billion in bonds have to be redeemed.
Germany and France urged Greek leaders on Monday to “live up to their responsibilities” by agreeing to the new cutbacks.
Demands for cuts to the country’s public-sector payroll were also on the table. The international creditors have asked for job cuts in the police and the armed forces, and there are even proposals to lay off teachers who work on temporary contracts, as part of the targeted 150,000 civil servants whose jobs will have to be eliminated by 2015.
In Brussels, the European Commission defended the troika’s demand for a cut in the minimum wage.
Commission spokesman Amadeu Altafaj said the Greek minimum wage averaged 871 euros a month, compared with 748 euros in Spain, which is not under an EU/IMF rescue program, and 566 euros in Portugal, which has received a bailout.
So apparently, the whole point is to drive wages of Greeks to as low as the lowest other nations in the Euro. David Dayen at FDL News put it this way earlier today with the headline “Greece Asked to Destroy Itself In Exchange for Bailout”:
Greek bailout talks have deadlocked again, but at the moment the culprit is not the hedge funds seeking a higher payout on the distressed debt they bought, but the “troika” of the EU, ECB and the IMF. They gave Greece a Monday deadline to accept bailout terms. And those terms, frankly, are totally insane.
The deal calls for Greece to run a primary budget surplus (not counting interest payments on debt) in 2013 of over 2% of GDP, rising to over 4% by 2014. That implies massive cuts to public spending in the middle of a 5-year recession, if not a depression. As Antonis Samaras, leader of the New Democracy Party, told the Financial Times, “They’re asking for more recession than the country can take.” Samaras also has highlighted that the troika seeks cuts in private sector wages as part of the deal, of up to 25%. There would also be a 35% cut in supplementary pensions.
If Greece fails to agree to this today, the troika will likely suspend debt payments, forcing the country into default. European leaders said explicitly that they would not fund a continuing bailout unless Greece agreed to the troika’s demands.
This is where the tin foil comes into play for me. The “Preview of Coming Attractions” is telling me that if/when the Greek minimum wage gets pushed down, it will intensify the push here in the US to lower the minimum wage. Even if it is almost impossible to make it on a minimum wage as it is, it won’t stop those who push this level of gibberish.
But hey, doG forbid, any banksters get a smaller than expected bonus. Why that truly is a sign of the coming apocalypse.
And because I can:
Cross posted from Just A Small Town Country Boy by Richard Taylor