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Greece backs new austerity plan Greece backs new austerity plan
(40 minutes later)
The Greek government has approved a new package of tax rises and spending cuts to save 4.8bn euros ($6.5bn; £4.4bn) and ease its budget crisis. The Greek government has approved a new package of tax increases and spending cuts to save 4.8bn euros ($6.5bn; £4.4bn) and ease its budget crisis.
The measures include a rise in sales and luxury taxes, a 30% cut in the holiday bonuses paid to civil servants, and a pensions freeze. The measures include rises in sales taxes, a cut in holiday bonuses paid to civil servants, and a pensions freeze.
The EU had called for austerity measures amid fears that Greece's problems could undermine the eurozone.The EU had called for austerity measures amid fears that Greece's problems could undermine the eurozone.
In Brussels, the European Commission welcomed the new package. The new package was condemned by Greek trade unions but welcomed by the European Commission.
Commission President Jose Manuel Barroso said the plan confirmed that the Greek government was committed to "taking all necessary measures" to cut its deficit.Commission President Jose Manuel Barroso said the plan confirmed that the Greek government was committed to "taking all necessary measures" to cut its deficit.
The new measures include:The new measures include:
  • Pensions freezes
  • Cuts in public sector pay
  • A increase in sales tax from 19% to 21%
  • Rises in taxes on fuel, cigarettes and alcohol
  • Rises in taxes on luxury goods
  • Pensions freezes
  • Cuts in public sector pay
  • A increase in sales tax from 19% to 21%
  • Rises in taxes on fuel, cigarettes and alcohol
  • Rises in taxes on luxury goods
'Survival''Survival'
Greek Prime Minister George Papandreou has likened the budget crisis to a "wartime situation".Greek Prime Minister George Papandreou has likened the budget crisis to a "wartime situation".
ANALYSIS By Malcolm Brabant, BBC News, Athens In a country with Byzantine financial practices, one of the more idiosyncratic traits of Greek employment law is the requirement that workers receive their annual remuneration in 14 segments.ANALYSIS By Malcolm Brabant, BBC News, Athens In a country with Byzantine financial practices, one of the more idiosyncratic traits of Greek employment law is the requirement that workers receive their annual remuneration in 14 segments.
The methods vary, but in principle, employees get a full month's extra wages at Christmas, an extra half month's salary to help during the summer holiday period, plus another half month's salary at Easter.The methods vary, but in principle, employees get a full month's extra wages at Christmas, an extra half month's salary to help during the summer holiday period, plus another half month's salary at Easter.
The bonuses carry great symbolic value in Greece, but the European Commission has urged the government to scrap them for civil servants.The bonuses carry great symbolic value in Greece, but the European Commission has urged the government to scrap them for civil servants.
Some of the cabinet have been reluctant to do so, not least because of strong opposition from trades unions. The unions fear that any reduction in the bonuses will not be just for the duration of the crisis but will be permanent.Some of the cabinet have been reluctant to do so, not least because of strong opposition from trades unions. The unions fear that any reduction in the bonuses will not be just for the duration of the crisis but will be permanent.
The main civil service union has called a 24-hour strike on 16 March.The main civil service union has called a 24-hour strike on 16 March.
He told reporters: "These decisions are necessary for the survival of the country and the economy, so that Greece can exit the vortex of speculators and defamation, so that we can breathe and keep on fighting."He told reporters: "These decisions are necessary for the survival of the country and the economy, so that Greece can exit the vortex of speculators and defamation, so that we can breathe and keep on fighting."
The socialist government has pledged to reduce Greece's budget deficit from 12.7% - more than four times the limit under eurozone rules - to 8.7% during 2010.The socialist government has pledged to reduce Greece's budget deficit from 12.7% - more than four times the limit under eurozone rules - to 8.7% during 2010.
It is also seeking to reduce its 300bn euro ($419bn; £259bn) debt.It is also seeking to reduce its 300bn euro ($419bn; £259bn) debt.
Correspondents say businesses in Greece are likely to react badly to further tax increases, as they see them as being counter-productive, discouraging consumer spending and contributing to a further downward spiral. The euro rose against the dollar after the new austerity measures were unveiled.
There have already been strikes by trades unions in protest against the government's cost-cutting plans. The German government welcomed them, saying they were likely to inspire confidence in Athens.
And Panayiotis Vavouyios, head of the retired civil servants' association, said: "It is a very difficult day for us. These cuts will take us to the brink. The BBC's Malcolm Brabant in Athens says the package may have pleased Europe and financial markets, but they have infuriated the Greek trades unions and left-wing politicians.
The head of the civil service union described the wage cuts and tax increases as unjust.
There have been strikes in protest against the government's cost-cutting plans.
The leader of the influential Communist Party described this latest round of financial pain as "shameful" and called for the working class to rise up against the EU and international markets.
On Wednesday Panayiotis Vavouyios, head of the retired civil servants' association, said: "It is a very difficult day for us. These cuts will take us to the brink.
"Brussels is demanding cuts and the government is doing nothing to stop them. To make poor pensioners pay for this crisis is a disgrace.""Brussels is demanding cuts and the government is doing nothing to stop them. To make poor pensioners pay for this crisis is a disgrace."
The German government welcomed the additional Greek austerity measures, saying they were likely to inspire confidence in Athens.
Mr Papandreou is due to meet German Chancellor Angela Merkel in Berlin later on Friday.Mr Papandreou is due to meet German Chancellor Angela Merkel in Berlin later on Friday.
Greek officials are quoted as saying the government is not ruling out seeking help from the International Monetary Fund if EU assistance falls short.Greek officials are quoted as saying the government is not ruling out seeking help from the International Monetary Fund if EU assistance falls short.
Will you be affected by the measures? Are you in the civil service in Greece? If you have information you would like to share with us, you can contact us by using the form below:Will you be affected by the measures? Are you in the civil service in Greece? If you have information you would like to share with us, you can contact us by using the form below:
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