Finance minister retains job in expanded new government amid struggle to speed up economic revival.
|Unions have vowed to continue labour unrest into the autumn after six general strikes already this year [Reuters]|
George Papandreou, Greece’s prime minister, has vowed to maintain the government’s austerity drive, as tens of thousands of protestors marched against the implementation of stinging economic measures.
“I lead this battle without thinking of the political cost. It is a battle for the survival of Greece. Either we fight it all together, or we sink,” Papandreou said on Saturday in his speech in the northern city of Thessaloniki.
Outside the city’s annual international fair, where the prime minister spoke, an estimated 20,000 people demonstrated against the government’s programme to decrease the country’s deficit.
The measures have already led to severe cuts in public sector spending and a series of general strikes.
Ahead of the speech Spiros Papaspirou, leader of the civil servants union ADEDY, told the protesters outside the fair: “Unions don’t agree with the social and economic politics of the government.
“They are demonstrating to send a message that the country is not saved from bankruptcy if the people themselves are bankrupt.
“There are going to be new austerity measures before Christmas because the state has not got as much tax money as they were aiming for.”
Tied by the conditions of a $73m EU/IMF bailout deal in May, aimed at rescuing Greece from bankruptcy, Papandreou’s government imposed tax rises and draconian salary and pension cuts to fight deficits, prompting a series of strikes and protests.
In his speech on Friday, Papandreou tried to allay public anger by promising to lower corporate taxes in an effort to revive the debt-plagued country’s shrinking economy.
He said the tax rate on companies’ retained profits would be cut from 24 to 20 per cent next year, providing what he called “a strong incentive for investments and competitiveness’.’
The prime minister also pledged to open up restricted professions, including truck drivers, notaries, taxi drivers and pharmacists.
He promised to also deregulate the energy market, settle on privatisation targets and simplify business licensing procedures by the end of 2010.
Papandreou said his government would continue pushing reforms and opening up sectors of the economy such as electricity and freight transport.
He said it would overhaul loss-making state firms including Hellenic Railways (OSE), which has debts of $13.62bn, by cutting payroll and rail services.
About 40 per cent of OSE’s 6,300 workers would be let go and offered other public sector jobs, while the company faces private competition.
“I ask all the country’s productive forces to join us, to support this great change,” he said.
Laurence Lee, Al Jazeera’s correspondent in Thessaloniki, said: “What the protesters want more than anything is for money not to be taken from them but from the rich. In his speech Papandreou acknowledged that.
“He said he accepted the economic measures had been unpopular. He said he knew it was unfair to be taking money from the poor to the rich but said it was vital for Greece.
“He is in for a big fight if he’s going to push these measures through. It’s a very febrile situation. The cuts are reducing the deficit but at what cost.”
An extra 4,000 officers had been drafted in from around the country to police Friday’s rally.
Earlier in the day, officers made several arrests, including one person who allegedly tried to throw a shoe at the prime minister.
A group of a few hundred youths tried to break through police lines cordoning off the venue and were pushed back with tear gas in clashes that lasted a few minutes.
One of the marchers, 24-year-old economics graduate Manolis Spathis, blamed big business for the country’s economic woes.
“They are trying to blame Greek people, but industrialists and bankers took the money,” Spathis said.
Reforms ‘on track’
Unions in Greece have promised to continue labour unrest into the autumn after six general strikes already this year against the centre-left government’s tough reforms.
The government has said that its target of reducing the budget deficit from 13.6 per cent of annual output in 2009 to 8.1 per cent this year is on track.
“We will continue as we started,” Giorgos Papaconstantinou, the finance minister, said late on Friday.
However, he warned that “several more months must pass before we can convincingly show that what has been done was not a flash in the pan, and that we won’t fall to pieces at the first sign of hardship”.
Parts of northern Greece have been hit the hardest by rising unemployment.
In the town of Naoussa, the jobless rate has hit 50 per cent and some factories have been relocated to nearby Bulgaria.