To receive the biggest bailout in history valued at €110 billion and unburden the nation’s economy, Greece passed the following measures at a May 6 session, during which three PASOK MPs were expelled and Dora Bakoyianni was thrown out of New Democracy for voting ‘yes’ against populist lines. The day before, three people and an unborn child were killed after hooded youth firebombed Marfin Bank.
Supplemental austerity measures in November 2010 included further VAT hikes effective January 2011, after Eurostat figures were again revised up to 15.4 percent of GDP and an audit revealed Greece had not met revenue goals.
A third set of austerity measures took effect January 1, 2011. This was followed by a fourth round called “Μεσοπρόθεσμο” (Mesoprothesmo) or the Midterm, passed June 29 and enacted July 21, 2011, on the heels of Greece’s continued failure to collect millions in back taxes and the announcement of a 2010 deficit totaling 10.5 percent of GDP.
A fifth round called “Πολυνομοσχέδιο” (Polynomoschedio), translating roughly to the Multi-Bill, passed October 21, 2011, after which then-PM George Papandreou announced a referendum, the IMF/EU/ECB froze release of the sixth bailout tranche and a coalition government took power mid-November. Outrage and a sense of injustice by the general public have made these measures a central issue during May and June elections, with politicians promising renegotiation or non-implementation, while the the EU-IMF bailout and continued inclusion in the euro zone hinge on honoring them.
Finally, ‘Memorandum 3′ was passed by Parliament on November 7 while violent protests took place outside. MPs threatened to walk out when one member proposed they also cut their salaries in a gesture of equality and empathy with citizens. The measure was struck down.
The list below refers to the second round of austerity measures from May 2010, which had been the most drastic until October 2011. In Greek, it is simply called “Μνημονίο” (Mnimonio) or the Memorandum.
*Article last updated November 8, 2012.
Author’s note: The first round of austerity measures from January 2010 were self-imposed in hopes of preventing IMF intervention.
Have they been done?
Since publishing this list in May 2010, people wonder if these measures have been carried out as promised or if Greece is dragging its feet.
Where known, I added a checkmark (√) for items completed. In some cases, it is unclear because parameters have been announced, revoked and revised dozens of times, and implementation does not always go forward after official publication when the EU-IMF audit team isn’t looking.
All reductions in salaries, benefits and allowances apply to members of Parliament, government officials and civil servants.
√ • Cut the 13th and 14th ‘doro’ for all public sector employees earning a gross minimum salary of €3,000/month. Anyone earning below €3000 will receive €250 for Easter, €250 for summer and €500 at Christmas. If you do not understand what ‘doro’ means, read “Christmas doro” which explains that these are not bonuses, gifts or extra salaries. Foreign correspondents outside Greece nearly always get it wrong.
√ • Reduce allowances by 8-20 percent in the public sector and 3 percent in the wider public sector (utilities, etc.).
• Establish a uniform pay-scale from 2011 (not done, scheduled for June 2012)
√ (so far) • Freeze all public sector salaries until 2014
A collective agreement signed July 15 ensures that private sector employees in Greece continue to receive their annual salaries in 14 payments, with the 13th and 14th ‘doro’ staying separate and not re-incorporated to 12 payments as originally proposed. There will be no inflationary raise for 2010 and only a 1.5-1.7 percent increase for 2011 and 2012, well below actual inflation currently running at 5.6 percent and rising.
√ • Assess one-time tax to companies showing a minimum profit of €100,000 from 2009:
– 100,000 – 300,000: 4 percent
– 300,001 – 1,000,000: 6 percent
– 1,000,001 – 5,000,000: 8 percent
– 5,000,001 + : 10 percent
√ • Raise lawful redundancy rate, making it possible for employers to reduce staff
– Up to 20 employees: No limit
– Between 20-150 employees: Up to six dismissals a month
– More than 150 employees: Up to 5 percent of staff or 30 dismissals a month
√ • Reduce severance pay, which would also be paid in bimonthly installments instead of a lump-sum
√ • Shorten the lawful termination notice period from 24 months to one to four months
√ • Young people up to age 21 can qualify for a one-year contract at 80 percent (592 euros) the minimum wage & IKA contributions, then be integrated with OAED programs upon termination. Effective July 1, 2011.
• Young people between the age of 15-18 can be hired for 70 percent the minimum wage, which is 518 euros.
√ • Redundant employees can no longer contest dismissal unless ex-employer agrees
√ • First-time employees under age 25 would be paid less than minimum wage
• Self-employed with OAEE, aged 30-65, without work for any reason are covered by insurance for two (2) years as long as they: a) Worked a minimum of 600 days, plus 120 days for every year over the age of 30 until reaching 4500 days or 15 years of work; b) are not insured by public sector insurance carrier.
√ • Open “closed professions” by July 7, 2010. Finally done on July 2, 2011, a year late, but it was done hastily and without clear parameters so people are confused, and concessions were made to certain industries.
√ • Cancel second installment of solidarity payments
• IKA contributions by employer and employee to increase 3 percent from 2011. (not done)
Note that an overhaul of the pension system had been discussed and outlined well before IMF intervention but was never implemented. Greece has a disproportionate aging population with 2.6 million pensioners, a work force of only 4.4 million — but shrinking by 700 workers/day in the private sector — and a total population of 11.2 million, causing the state to take loans to keep pace with monthly payments. This was exacerbated when tens of thousands took retirement before minimum age requirements were raised. It is estimated that 86 percent of the population will be financially dependent on the Greek state by 2060 (frightening), unless economic productivity doubles and birth and immigration rates increase exponentially.
On July 8, 2010, Parliament passed pension reform in principle, after the bill had been amended 50 times. A summary of the main changes are below, but you are free to view all 77 articles in Greek: “Άρθρο προς άρθρο το νέο ασφαλιστικό.”
√ • Cut the 13th and 14th ‘doro’ for all pensioners collecting a gross minimum payment of €2,500/month. Anyone earning below €2,500 will receive €200 for Easter, €200 for summer and €400 for Christmas. These ‘dora’ are not extra payments, bonuses or vacation pay, as explained in “Christmas doro.”
√ • Cut the 13th and 14th ‘doro’ and allowances for all pensioners aged under 60, except for exceptions that include minimum number of contribution years being met and/or having children under 18 or students up to age 24 in household. These ‘dora’ are not extra payments, bonuses or vacation pay, as explained in “Christmas doro.”
√ (so far) • Greek pensions frozen through 2013 (many were lowered through taxation and cuts)
√ • Calculate pension payments based on average over entire course of working life; those qualifying under the old and new system will receive pensions based on the old system through 2010 and on the new system from 2011-2014. In 2015, the minimum pension system will take effect.
√ • Equalize general retirement age for men and women in both private & public sectors, announced as 65. Not done until 2011 and conditions keep changing.
√ • Increase retirement age according to life expectancy, starting 2020, and will apply to all sectors and classifications.
√ (so far) • People may retire at 60 with reduced pensions calculated at 6 percent penalty per year; or at 65 with a full pension after 40 years of work (not 37 years). Starting 2015, no one under 60 can retire early.
• Workers classified in “heavy” industries or “dangerous professions” can retire at 60 (not 55), starting January 2011.
√ • Reinstate LAFKA, which will assess a solidarity levy of 3-9 percent on pensions more than €1400, starting August 1, 2010.
– 1401-1700: 3 percent
– 1701-2300: 5 percent
– 2301-2900: 7 percent
– 2901-3200: 8 percent
– 3201-3500: 9 percent
– More than 3500: 10 percent
√ • People working ‘dangerous’ or ‘heavy’ professions will see the retirement age rise from 55 to 58 60, starting 2011. Amended July 15, 2010.
√ • Raise retirement age for working mothers:
– In private sector: To 55 (not 50) in 2011, age 60 in 2012 and age 65 in 2013.
– In public sector: To age 53 in 2011, age 56 in 2012, age 59 in 2013, age 62 in 2014 and age 65 in 2015.
– With three children: Can retire at age 50 in 2011, age 55 in 2012 and age 60 in 2013.
√ • Revoke pension of any civil servant younger than 55, who is caught working; cut pension of any civil servant, aged 55 or older, by 70 percent if caught working and pension is more than €850/month. Starting 2011.
√ • Limit the transfer of pensions from father/mother to children, according to age and income criteria, which includes payments to 26,000 unwed/divorced daughters of bank or civil servant employees; if children are eligible to receive a two-pension transfer, only the highest will be paid from 2011.
√ • Full pensions can be transferred to widows if death occurred after five years of marriage, he/she is over 50 and income criteria are met. However, payments will be held for first three years after date of death.
• Establish guaranteed minimum pension of €360, then add qualifying income and contributions for everyone over age of 65. Starting 2015, not 2018. Increase to be determined by GDP, inflation and consumer price index from 2014. (not done yet)
√ • Pension will not exceed 65 percent of one’s monthly income while working. Previously, Greeks could retire on 96 percent of their salary based on the last and highest paid years of work.
√ • Uninsured can qualify for a minimum pension if he/she is 65, meets income criteria and lived in Greece for 15 years.
• Merge Greece’s 13 pension funds into three unified funds by 2018 for salaried workers, farmers and self-employed; public sector workers will be integrated into IKA by 2013. (not done yet)
• Reduce the number of insurance funds serving lawyers, engineers, journalists and doctors. (not done)
√ • Complete revision of Greek military armed/security forces, including raising the number of years required to qualify, removing special bonuses and benefits. See “Χακί συντάξεις στα 35 χρόνια υπηρεσίας.”
These tax increases took effect July 1, 2010, except where noted.
√ • VAT: All VAT rates were increased 10 percent, so 5 percent is 5.5 percent on books/newspapers; 10 percent is now 11 percent for food; and 21 percent is now 23 percent on goods and services. See “VAT in Greece” to understand what tax is assessed to which items.
√ • “Sin” tax: All tobacco, alcohol and fuel now subject to an additional 10 percent tax. This is the third increase since January 2010.
√ • Tax on luxury cars (new/used): Calculation of 10-40 percent tax is based on factory and market value. See “Νέο χαράτσι σε καινούρια και μεταχειρισμένα Ι.Χ.” for details and examples. As of August 2011, there has been talk of revoking this measure because it didn’t raise the revenue expected and is hurting several industries.
• TV advertising: All TV advertisements are subject to a 20 percent tax, postponed to 2013 starting October 2010.
• Online ad tax of 21.5 percent to fund online journalists not covered by a fund thanks to a loophole (withdrawn)
√ • New withholding tax applies from May 1, 2010 on both private and public sector salaries
√ • Special levy of 1 percent assessed to 50,000 individuals (marital status irrelevant) claiming a net income of 100,000 or more. Notices were sent June 2010. Those who didn’t pay are now facing possible jail time as of August 1, 2011.
“Greek lawmakers to debate austerity bill Tuesday” – WSJ (link removed)
“Greeks hit by new wave of austerity” — Reuters
“Συντάξεις: δεκάλογος ανατροπών” — Ta Nea
“Χάνουν τα δώρα συνταξιούχοι κάτω των 60 ετών” — Eleftherotypia
“Μαχαίρι σε μισθούς και συντάξεις” — Ta Nea
“Μέτρα-σοκ ύψους 30 δισ. ευρώ” — Eleftherotypia
“Καταργούνται δώρα-επιδόματα των βουλευτών” — Ta Nea
“Πως θα υπολογιστεί η έκτακτη εισφορά στις επιχειρήσεις” — Eleftherotypia
“Η λίστα με τα νέα μέτρα” — Ta Nea
“Ειδικός φόρος 20% στις τηλεοπτικές διαφημίσεις” — Eleftherotypia
“Greece’s new austerity measures to qualify for bailout” — Reuters
“Τέλος και για 15.000 ανύπαντρες «κληρονόμους» συντάξεων” — Eleftherotypia
“Οι νέες τιμές σε ποτά – τσιγάρα – καπνό” — Eleftherotypia
“«Εδώ και τώρα» οι ανατιμήσεις σε βενζίνες, ποτά, τσιγάρα, Ι.Χ.” — Eleftherotypia
“Ένα προς ενα τα άρθρα του νομοσχεδίου για τα νέα μέτρα” — Eleftherotypia
“EU ministers agree to €500 billion emergency fund to save euro” — Guardian
“IMF approves €30 billion as part of biggest bailout in history” — Reuters
“Οι 8 πληγές του Μνημονίου” (Charts) — Eleftherotypia
“Κανένας πριν από τα 60 στη σύνταξη μετά το 2015” — Ta Nea
“«Ψαλίδι» 5 δισ. ευρώ ετησίως στις συντάξεις με διαφορικές εξισώσεις” — Eleftherotypia
“Greek cabinet approves pension reforms” — WSJ
“Όλες οι αλλαγές στο Ασφαλιστικό” (Charts: Examples of IKA/OAEE pension calculations) — Eleftherotypia
“Greece’s pension reform bill” — Reuters
“Tougher pension reform unveiled” — Kathimerini
“Ανώτατη σύνταξη με 40 χρόνια” (Charts) — Ta Nea
“Ψαλίδι στις πρόωρες και τις επικουρικές” — Ta Nea
“«Ολοι στα 65 από το 2015» ζητεί η τρόικα” — Ta Nea
“Αναδρομικά από 1η Μαΐου οι αλλαγές σε μισθούς και συντάξεις” — Eleftherotypia
“Νέο σοκ στις συντάξεις” — Ta Nea
“Λυπητερή για 50.000 «έχοντες»” — Ta Nea
“Και νέο μαχαίρι σε μισθούς – συντάξεις” — Ta Nea
“Τριπλό ψαλίδι στις συντάξεις” — Eleftherotypia
“Ο χάρτης των ανατροπών” — Ta Nea
“Περισσότερες απολύσεις – λιγότερες αποζημιώσεις” — Ta Nea
“Στο «απόσπασμα» οι γυναίκες (Changes pertaining to women)” –Eleftherotypia
“Greece to ease restrictions on layoffs and severance pay” — Forbes/AP (link removed)
“Unwed daughters catch time bomb in pension overhaul” — Bloomberg
“Factbox: Greece prepares pension overhaul” — Reuters
“Greece Sends Pension Overhaul to Parliament as Strike Looms” — Bloomberg
“Τα νέα όρια συνταξιοδότησης” — Ta Nea
“Σύνταξη στα 65 για όλες τις μητέρες” — Ta Nea
“Greece Backs Down from Online Ad Tax” — NY Times
“EC threatens to sue Greece for not opening closed professions by July 7” — eKathimerini
“Συμφωνία για αυξήσεις κόντρα στο μνημόνιο” — Ta Nea
“Parliament passes laws on salary raises, audits, advertising” (Article removed) — ANA-MPA
“Timeline: Key dates Greece’s debt crisis” — Reuters