We either cut private sector wages or we default

In yesterday’s meetings with the social partners and under the threat of default in March, PM Lucas Papademos urged them to reach an agreement on wage reductions in the interest of competitiveness and containment of unemployment.

Papademos described the seriousness of the situation: "Negotiations with the Troika start in mid-January, and will focus on establishing a credible economic adjustment program for 2012-15. This will not only judge the application of the debt reduction, but the continuance of the funding of our country. Without the agreement with the Troika and the consequent funding, Greece faces an imminent threat of uncontrolled default in March."

The PM informed the employer organizations and GSEE about the demands of creditors, noting that among the issues set for review within the social dialogue is "the minimum wage, the 13th and 14th salaries, automatic maturities that constitute annual increases independent of productivity and other economic conditions that lead to a cumulative erosion of competitiveness."

Given the ultimatum of the Troika, Papademos urged an immediate start of dialogue. "The productive forces of the country, the entrepreneurship sector, the working world, the Greek people in general, must all have full and accurate knowledge of the critical circumstances. It is our decisions and actions that will judge the country's ability to return on a sustainable path of stabilization and recovery, and our future to the euro as well."

He warned that the forthcoming Troika evaluation will be a difficult test for the Greek side. "In the coming weeks we will have our partners' assessment on whether they can continue to support our economy. There is strong scepticism regarding our progress in relation to the extent of the problems we are facing. If we do not take significant steps the evaluation will not be positive."

SEV president Dimitris Daskalopoulos moved along the same lines, sending a letter/invitation to the social partners to start the dialogue on Monday, as we do not have the luxury of time and negotiations must be completed by the end of January. "It has become clear that we must have a social dialogue prior to the signing of the new loan agreement with the Troika, to find a new balance in average wage costs, to enhance the competitiveness of our economy and to protect our job positions." At yesterday's meeting with the prime minister, Daskalopoulos formally raised the issue of reducing wages, stressing however that SEV will make every effort to avoid affecting the minimum wage.