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Workers in Europe battle austerity programs

Published Feb 11, 2010 11:28 PM

Contagion and uncertainty worry the capitalists worldwide after the European Commission accepted Greece’s economic recovery plan. Whether this plan will resolve the Greek government’s huge deficit, which is about 12.7 percent of the total production of Greece’s economy, is unclear.

Even if the plan itself works, it is clear that the Greek working population will actively reject it. It is even clearer that Goldman Sachs, the big U.S. bank, will have problems selling 53 billion euros (now $73 billion) in bonds to provide the financing Greece needs by the end of June.

What will happen to Portugal and Spain’s economy if Greece’s goes into a tailspin and Greece defaults on its payments? It always creates a very sticky situation when “sovereign” debt — that is, government debt on bonds issued in a currency that is not the national currency — is involved, and the government cannot pay the debt by simply printing the money, as the U.S. government does. Gretchen Morgenstern, the chief economics columnist for the New York Times, writes that it is unlikely that the economic problems of these countries will remain confined to the euro zone. (Feb. 7)

The Feb. 7 Wall Street Journal, another authoritative organ of the U.S. ruling class, claims that “worries about Greece’s debt woes sparked wild swings in the U.S. stock market last week. Signs that the trouble in the Greek bond market was infecting others in Europe helped send the Dow Jones Industrial Average into a spiral” downward on Feb. 4 and 5.

While the plan Greece submitted to the EC contains a lot of nonsense about transparency, credibility, monitoring and reforming structures, the heart of the plan is cutting employment in the civil service. It demands a hiring freeze in 2010, a rule that only one new worker be hired for every five who retire from 2011 onward, salary cuts of 10 percent, and no increases in wages over 2,000 euros ($2,700) a month.

Greek, Portuguese workers protest cuts

Working people in Greece are already responding with vigorous protests to this “recovery” plan, which is a harsh attack on their wages, pensions and social services.

Greek farmers just wound down a three-week-long tractor “clog-in” where they used their tractors to block many of the main roads leading north to Bulgaria. Tax and custom collectors held a two-day strike Feb. 4 and 5, which meant that imports were held up at the border. Civil servants are striking Feb. 10, and a general strike is planned for the last part of February.

This is the “contagion” that Europe’s capitalist class really fears — militant labor union struggles in the street.

In Lisbon, Portugal, 50,000 civil servants protested Feb. 5 against a freeze on public sector wages, aimed at making the workers pay for the spiraling public deficit. Government workers’ real wages have declined by 6 percent since 2000. The workers demanded a 4.5 percent wage increase.

Portugal’s government had announced it was freezing all public sector wages as part of the 2010 budget, while pursuing a policy of replacing only one of every two government workers who leave.

“This protest is about showing that workers are unhappy. These 50,000 people came to tell the government it has to change its right-wing policies,” said Ana Avoila of the Common Front union movement, which held the protest. (AP, Feb. 5)

“The government doesn’t want to resolve the crisis — it just wants to use it as an excuse to penalize workers,” charged Secretary-General of the Portuguese Communist Party Jeronimo de Sousa, who joined the protest.

Portugal’s deficit hit 9.3 percent last year, its highest since 1974, and this triggered the hedge funds’ and big banks’ concerns that Portugal might follow Greece into default.

After the demonstration in Lisbon, the opposition parties defeated the government’s austerity plan and passed their own bill on Feb. 5 that lets the country’s local regions use deficit spending to stimulate the economy.

The economies of two of the poorest countries in the Euro zone are suffering from their debt load and the world capitalist crisis. But the working class is struggling against the capitalists’ attempt to pay for the crisis by imposing austerity on the workers.