Austerity package will see Greeks facing major upheaval to way of life

GREEK citizens are not just facing working longer for less pay over the next few years, but a complete upheaval to their way of life.

The austerity package they signed off on in Brussels last night is an effort to reduce years of over-spending and a huge black economy that accounts for at least a quarter of their wealth.

As well as trying to reform the whole taxation system that at present sees tax inspectors taking back-handers for reducing the state’s share, they will have big increases in VAT, excise duty, green taxes and health taxes, such as on alcohol and tobacco.

The state’s wage bill will be cut drastically with salary cuts and lay-offs, including only replacing one in five of those retiring; pensions will be cut and the age raised from 53 to 65 years. This will increase further “in line with life expectancy”.

Their whole accounting system will be overhauled, not least in the health sector. Hiding huge debts in this area from the EU led to the realisation that the country was cooking the books, and submitting false figures to the European Commission.

There will be no more risky borrowing or having Goldman Sachs arranging currency swaps for the Greek government that allowed them to hide the true extent of their indebtedness.

With experts from the European Commission and the IMF on hand, the public financial management will come under the microscope. There will be new and very tight procedures for every step of the state process for collecting and getting in money, drawing up budgets, accounting for expenditure and reporting to the Commission and the IMF, as well as to the Greek citizens.

Every three months there will be a report to the European Commission, the European Central Bank and to the IMF on how the efforts to reduce the debt is going.

In the meantime, the whole apparatus of the Greek state will be overhauled, with the government working closely with the Commission and the ECB. The aim the agreement says is to “progressively alter the economy’s structure towards a more investment- and export-led growth model”.

Everything from rates of pay and employment procedures to reforms in the management of the health and other public services service will be introduced.

There will be an overhaul of elected and appointed officials to reduce the number of local administrations, aimed at cutting waste and corruption throughout the public service.

The private sector will not be spared either and the agreement says that private sector wages need to become more flexible. While the government will set minimum level wages to promote work for young and the long-term unemployed, there will be greater use of part-time work, rules limiting the number of people that can be fired from a company will be changed, and probationary periods will be extended.