Labor sector reforms, debt relief talks top priorities come autumn

19 August 2016
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The leftist Greek government will face at least three major challenges when most officials, ministers and top aides return from whatever summer holidays to Athens next week, with prospective debt relief talks with creditors amongst the foremost priorities.
Additionally, Greek Prime Minister Alexis Tsipras and his inner circle, along with the finance ministry’s leadership, will have to hash out the main points of the government’s economic and social strategy for the coming year, usually delivered in an address by Greek prime ministers at the annual Thessaloniki Trade Fair in early September.
Even though the annual “state-of-the-economy” address has lost much of its relevance since an economic crisis has battered the country on a month-by-month basis since 2009, persistent speculation about snap elections in the country will ensure than Tsipras’ appearance will be closely watched.
Another priority on the government’s agenda is to conclude negotiations with creditors over the latters’ demand for labor sector reforms in the country. The leftist government in Athens wants to avoid the most radical reforms proposed by creditors, especially the IMF, in a bid to keep its grassroots support intact — and amid opinion polls showing it slipping behind center-right main opposition New Democracy (ND) party.
Concluding negotiations with creditors is a prerequisite for achieving a second review of the current Greek program (third bailout).
Creditors want to eliminate the relevant labor minister’s right to sign-off on mass layoffs and to liberalize the framework under which Greek unions operate – and declare industrial actions — in the country. Those are just the most high-profile reforms on the table, although others are also up for negotiation.
At the same time, the government is trying to find “offset” measures in order to boost spending towards “socially weaker” strata of society, something that it will have to do with within an extremely tight fiscal environment and with creditors scrutinizing every cent of the Greek state budget.
On the debt front, a Euro Working Group meeting on Aug. 29 and a Eurogroup meeting on Sept. 9 are high on the government’s agenda, with final proposals expected to be tabled with the European Stability Mechanism for at least short-term debt relief measures.

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