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A comment before the week begins… January 23, 2012

Posted by proeconomia in Fiscal policy, Main, News on Greece, On the crisis, Opinion.

I am just reading in the news website in.gr that the troika is asking for written consent from the three major political parties supporting the current government that certain prerequisites will be satisfied before the completion of the PSI and the new deal for the debt. Among other things are elimination of the 13th and 14th monthly wage in the private sector, reduction is supplementary pensions, reduction of benefits in public service companies, firing of civil servants, reduction in health expenditures and opening up of all closed professions. My take on this, and I think I am not alone in saying so, is that the order should be reversed or at least have open markets everywhere before we strike at the remnants of the demand side. The demand for the elimination of the 13th and 14th wage in the private sector should not come as a surprise, as it supports the reduction of wage costs, nor the firing of civil servants as it compresses the wage cost in the public sector – although we are unaware of the percentage of the benefit that this wage cost reduction will bring forth. Be that as it may I think that we are at our wits end as to how we are supposed to revitalize an economy in recession without having access to competitive markets that will provide lower prices for those that are being asked to survive with lower wages. Open, free and competitive markets (mind you, its not just “competitiveness”) are essential for bringing down the cost of living (and aligning prices and wages) and generating extra employment and demand for the economy.



1. Constantina Kottaridi - January 24, 2012

The order SHOULD definetely be reversed! Is it that they are blind and ignorant or …what?

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