There were many distortions in the Greek finance and labour markets that had to be tackled, but Greece has taken all the necessary measures. Now it is up to the EU to come forward with the next aid tranche, Greek finance and labour ministers Giannis Stournaras and Giannis Vroutsis told the Economic Affairs and Employment committees on Tuesday.
“The Greek structural reforms are ambitious and comprehensive; we have reduced labour costs and red tape in order to improve competitiveness. The faulty price structure for goods and services, which prevented prices from falling together with labour costs, has also been addressed, giving an extra boost to the measures”, said Mr Stournaras.
He added that the final impact of the reforms had been diminished by the Troika programme’s shortcomings, as many of the measures imposed were front-loaded, pro-cyclical and fuelled recession.
Approval for the next aid instalment is therefore necessary to provide liquidity and growth, but also to restore credibility, encourage fresh investment and include Greece in the international markets again.
Replying to MEPs’ questions, Mr Stournaras stressed that if Greece does not get the next instalment, then it will face “insolvency and bankruptcy, with contamination effects”.
It is part of the Economic and Monetary Affairs Committee’s responsibility to question the effectiveness of measures considered in the Economic Dialogue with the Troika, so it will follow the dialogue very closely, said committee chair Sharon Bowles (ALDE, UK).
Labour and social reforms
“The measures taken have been very difficult for the Greek people, who made a lot of sacrifices. The Greek Parliament last week voted measures to cut labour and social costs, such as raising the retirement age from 65 to 67 and reducing pensions”, Mr Vroutsis told MEPs.
In debate, MEPs voiced concern that the Greek unemployment rate had reached about 25%, and over 50% among young people. “To fight the huge unemployment rate, we cannot do anything without growth”, underlined Mr Vroutsis. MEPs and ministers also stressed the need for more flexibility in European Social Fund support for unemployment measures.
“The Council of Europe recently decided that parts of the Greek labour market reforms induced by the Troika are in breach of the European Social Charter. The International Labour Organisation’s findings on respect for international labour conventions are expected soon”, noted Employment Committee chair Pervenche Berès.