The Austerity Measures
Greece had adopted a number of austerity packages since 2010.
The first round of austerity came with the signing of the memorandums with the IMF and the ECB concerning a loan of €80 billion. This first package of austerity measures, implemented on 9 February 2010, included a freeze in the salaries of all government employees, a 10% cut in bonuses, as well as cuts in overtime workers, public employees and work-related travels. Demonstrations and strikes followed the implementation of the measures.
Following fears of bankruptcy, further measures were implemented on 3 March 2010. These included, in addition to the above, 30% cuts in Christmas, Easter and leave of absence bonuses, a further 12% cut in public bonuses, a 7% cut in the salaries of public and private employees, a rise of VAT from 4.5% to 5%, from 9% to 10% and from 19% to 21%, a rise of tax on petrol to 15%, a rise in the taxes on imported cars of up to 10%–30%, among others. There were further protests on 5 and 11 March.
The second austerity package failed to improve Greece’s economic position, and on 23 April 2010 Prime Minister George Papandreou appealed to the European support mechanism for help, which asked for the implementation of more austerity measures.The new measures, announced on 2 May 2010, included replacement of the 13th and 14th month salaries of public employees with an allowance of 500 Euro for those with salaries of less than 3,000 euro and complete eradication of the 13th and 14th month salary for those with salaries of over 3,000 Euro, replacement of the 13th and 14th month pension with an allowance of 800 euro for those with a pension of less than 2,500 Euro, further cuts in salaries (in addition to the two previous austerity packages) by 8% for public employees, rise of the VAT from 21% to 23% and from 10% to 11%, rise in the special tax for the consumption of tobacco, alcohol and petrol by 10%, rise in the value of property (and thus higher taxes), rise of an additional 10% for all imported cars, and others.
In 2011, more austerity measures were introduced. In the midst of public discontent, massive protests and a 24-hour-strike throughout Greece, the parliament debated on whether or not to pass a new austerity bill, known in Greece as the “mesoprothesmo” (the mid-term [plan]). The government’s intent to pass further austerity measures was met with discontent from within the government and parliament as well, but was eventually passed with 155 votes in favor (a marginal 5-seat majority). The new measures included raising €50 billion by denationalizing companies and selling national property, an increase in taxes for anyone with a yearly income of over 8,000 euro, extra tax for anyone with a yearly income of over 12,000 euro, an increase in VAT in the housing industry, an extra tax of 2% for combating unemployment, an increase in taxes for pensioners by means of lower pensions ranging from 6% to 14% from the previous 4% to 10%, the creation of a specialized government body with the sole responsibility of exploiting national property, and others.
On 19 August 2011 the Greek Minister of Finance, Evangelos Venizelos, said that new austerity measures “should not be necessary”. On 20 August 2011, it was revealed that the government’s economic measures were still out of track; government revenue went down by 1.9 billion euro while spending went up by 2.7 billion.
In a meeting with representatives of the country’s economic sectors on 30 August 2011, the Prime Minister and the Minister of Finance acknowledged that some of the austerity measures, such as the high VAT, were irrational, and that they were forced to take them with a gun to the head. On 11 August 2011, the government introduced more taxes targeting at people owning immovable property. The new tax, which is to be paid through the owner’s electricity bill, affects 7.5 million Public Power Corporation accounts and ranges from 3 to 20 euro per square meter. The tax will apply for 2011–2012 and is expected to raise €4 billion in revenue.
On 19 October 2011, violent protests were seen in the streets when lawmakers voted in favour for new austerity measures. All 154 of the ruling Socialist PASOK party’s lawmakers voted in favour of the measures.
On 20th October 2011, the Greek Parliament passes the new austerity measures which include pay and staff reductions in the civil service, as well as pension cuts and tax hikes for all Greeks. The bill was passed by majority vote in the 300-member parliament.
At the same time, despite calls for the release of the next tranche of financial aid, the IMF, which together with the European Commission and the European Central Bank comprises the ‘troika’ of inspectors in Greece, believes the EU’s debt projections are too optimistic and wants to wait until after a euro zone summit on Sunday, 23rd October 2001, to see if discussions there produce a clearer picture on how the debt levels can be made more sustainable to justify the release of the next sixth tranche of €8 billion in installment aid.
Social Impact
The social effects of the Greek austerity measures have been utmost severe, including poor and needy foreign immigrants. Some Greek citizens are even turning to NGOs for healthcare treatment. On 17 October 2011 Minister of Finance Evangelos Venizelos announced that the government would establish a new fund, aimed at helping those who have been hit the hardest from the government’s austerity measures. The money for this agency will come from the profits made by tackling tax evasion.
The austerity measures, while attempting to reduce Greece’s debts, have greatly impact the economy, raising unemployment, social unrests and plunging the economy into a deeper recession.
Regardless whether Greece will default or continue to receiving help from international lenders with the possibility of more austerity measures forthcoming, it would certainly be years, if not decades, before Greece could restore her former glory.
Andrew Michael Teo 
Pingback: yan