In November 1997, the Greek Government submitted to Parliament its 1998 Budget, which has been characterised as the most restrictive of the past decade.
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In November 1997, the Greek Government submitted to Parliament its 1998 Budget, which has been characterised as the most restrictive of the past decade.
The Government presented its 1998 Budget to Parliament on 12 November 1997. The new Budget as a whole, and in particular its provisions for incomes policy, provides for a 2.5% increase in pay in line with its target for inflation which has also been set at 2.5%. Tax bands have been indexed at between 5.6% and 5.7% (matching the average increase this year in inflation) whilst other elements in wage earners' tax schedules have been increased.
According to the Minister of National Economy, the new Budget is "an expenditures and convergence budget", whose primary aim is to cover the needs of convergence with the EU and enable Greece's integration into Economic and Monetary Union (EMU).
The general secretary of the Confederation of Public Servants (ADEDY) has stated that this is the harshest Budget in recent years, which signals a further reduction in the living standards of public servants. He also claimed that the announced incomes policy combined with the especially low rate of indexing, the failure to increase standard deductions and the increase in the monthly "withholding tax" are leading to a dramatic decrease in the real income of public servants and pensioners, despite government commitments included in the recent tripartite "Confidence Pact" (GR9711138F). In order to express its dissatisfaction officially, ADEDY called a 24-hour strike for 25 November.
The Greek General Confederation of Labour (GSEE) has issued more muted criticism. Its president says that the wage expenditures envisaged by the budget do not guarantee workers' real income, but concedes that there have been some improvements for low-income pensioners. He also says that partial indexing of tax bands and proportional calculation of payroll tax are measures which lighten the tax burden for wage-earners and pensioners, notwithstanding the fact that they do not remedy inequities in taxation.
From the employers' side, the strongest opposition has been voiced principally by the small industry and business sector. The General Confederation of Greek Small Businesses and Trades (GSEVEE) states that the Budget does not promote economic development, and that it puts the main emphasis on collection of revenue as it persists in a harsh stabilisation policy. In fact, GSEVEE describes 1998 as a year when small and medium-sized businesses will be "bled white" by taxation, and stresses that income from taxation will rise by 12.7%, that is three times higher than the forecast rate of inflation, thus draining the lower strata, especially the "have nots".
Overall, the new Budget has sparked a wave of strong opposition amongst the political parties and workers, as well as amongst economic, political and social agencies.
Eurofound recommends citing this publication in the following way.
Eurofound (1997), 1998 Budget provokes strong opposition, article.
