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Greek Union Warns of Austerity "Death Spiral"

by Renee Maltezou

ATHENS - Greece risks sliding into a "death spiral" if the government continues to slash salaries and lay off workers instead of cracking down on tax evasion and raising money from the rich, the head of the biggest public sector union said Tuesday.

A woman shouts slogans during a rally of the ''Indignant'' group in front of the parliament in Athens October 15, 2011. (Credit: Reuters/Yiorgos karahalis) Speaking ahead of a 48-hour general strike called to protest tough new austerity measures, due to be approved this week, Costas Tsikrikas, head of the 500,000-strong ADEDY union, accused Prime Minister George Papandreou's Socialist government of blindly pursuing austerity measures that would plunge Greece deeper into recession.

"This will exacerbate recession, unemployment and state revenues will continue to fall, creating a death spiral. It must not continue," Tsikrikas told Reuters in an interview and urged lawmakers to reject the package when it is voted in parliament Wednesday and Thursday.

Tsikrikas said the latest measures, which include tax hikes and pay and pensions cuts, would wipe out any hope of growth for the stricken Greek economy, crushed by debt and now in its third year of recession.

"All we're doing every time is waiting for the troika to release the next tranche," he said, referring to inspectors from the European Union, the European Central Bank and the International Monetary Fund which visit Athens every three months to assess whether Greece deserves new bailout loans.

"The government has to call on the rich to contribute. Workers look more like squeezed lemons now, they can't take it anymore," he said.

"The state must take the money from those who have the income to pay the taxes. The rich, the big companies that use the workforce of this country," Tsikrikas said. "Don't they owe the country and its people something?"

He also urged more action on endemic tax evasion, particularly rife among professions such as doctors and lawyers, where under-the-table cash payments -- known in Greece as fakelaki or "little envelopes" -- are standard practice to avoid declaring income.

"People are right to want justice, the burden equally shared, a just tax system and a crackdown on tax evasion," he said.

Tsikrikas rejected any suggestion that Greece should leave the euro zone and return to the drachma, which would allow its currency to devaluate and become more competitive. He said Greece's European partners needed to continue supporting it in the interests of the bloc.

"It is the EU's duty to help, because this is how it also helps Europe as a whole and the common currency," he said.

GROWING DISILLUSIONMENT

The general strike, called by ADEDY and the main private sector union GSEE, is expected to shut down much of the country and follows days of individual strikes by groups ranging from garbage collectors to doctors and judges.

Tsikrikas, a school teacher who took the reins of ADEDY two months after an earlier wave of anti-austerity protests in June, said the government had not done everything in its power and must change course, even now.

He said that despite repeated promises, the government had failed to take advantage of Greece's strengths in areas like agriculture and green energy and had been slow to make full use of existing European subsidies.

"It has to promote Greek products, our services, tourism and shipping, the country's natural beauty," Tsikrikas said. "It must also make use of all energy sources, solar and wind power."

Tsikrikas' comments reflect growing union disillusionment with the ruling PASOK party, which built up Greece's bloated and inefficient public sector under the leadership of Papandreou's charismatic father Andreas Papandreou in the 1980s.

Greek public sector workers, paid on average 1,300 euros a month, will see their salaries cut by more than 40 percent once a unified wage scale is imposed under the new measures.

On top of slashing pensions and state wages by about 20 percent in 2010, the government broke a 100-year-old taboo last month by allowing public sector layoffs in a country where the constitution guarantees state workers jobs for life.

"The crisis is not the public sector's fault," Tsikrikas said, rejecting the frequently heard criticism that public offices are filled with idle civil servants put there in return for political favors.

Instead, he attacked a political class which has grown fat on the fruits of corruption and abuse of office.

"The ones to blame are the main parties and governments that used public sector workers in their hunt for votes, treated public administration as if it was a form of loot," he said.

The protests are expected to be among the biggest since the crisis began and will add to pressure on Papandreou, who is struggling to quell dissent in his own ranks with one PASOK deputy resigning in protest Monday.

"We'll see whether the government can make it through tomorrow," Tsikrikas said.

(Editing by James Mackenzie and Karolina Tagaris)

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