Already almost two in three firms (64 percent) have adopted some form of labor cost-cutting measures. For the next few months, the most common of these will be reductions in working hours. Giorgos Haros, managing director at ICAP People Solutions, says this trend is set to grow in the next three months.
The cuts by business combined with government austerity measures will severely reduce income. The government cuts include:
- Public sector wages to be cut by 20 per cent, and wages of state-owned enterprises to be cut by 30 per cent
- 30,000 civil servants to be put on partial pay — meaning 60 per cent of regular pay for one year
Strikes and civil unrest could further reduce economic activity. A 24-hour strike over wages and labor rights organized by the Athens Labor Center (EKA) and the Confederation of Greek Labor (GSEE) will lead to transport disruption in Athens on Tuesday.
The downward spiral in the Greek economy has been relentless. At this point, there do not seem to be any viable plans to revitalize the Greek economy. EU leaders seem to be exclusively focused on avoiding the short term problem of avoiding a default and protecting European banking interests. It is challenging to envision how the Greek economy can be saved any time soon.