More austerity measures for Greece

Greece will suspend more civil servants than originally planned and impose new pension cuts as part of more austerity measures, the government said today, as it tried to persuade international creditors to continue bailout payments needed to avoid a chaotic default.

Government spokesman Elias Mossialos outlined the new spending cuts after a six and a half hour Cabinet meeting, the outcome of which was being watched closely by nervous global markets.

The new measures include increasing the number of civil servants to be suspended on partial pay to 30,000 this year from 20,000. Monthly pensions above €1,200 will be subject to new cuts, as will the pensions of people under the age of 55.

The tax-free limit on annual income will drop to €5,000 from €8,000, and the cut will be applied to this year’s income, he said.

The prospect of more tax increases and spending cuts are likely to be met with mounting concern in a country mired in a deep recession and with the number of unemployed rising to around one in seven. Greece’s two largest labour unions have already called for another general strike on October 19.

The measures came after Finance Minister Evangelos Venizelos briefed parliament on the results of tough negotiations with the country’s international debt inspectors during teleconferences on Monday and yesterday.

“We have to take supplementary measures... because of the recession, because of the difficult task, and the weakness of the central administration have not produced the required results,” he told politicians in the parliament session.