Local view for "http://purl.org/linkedpolitics/eu/plenary/2010-04-20-Speech-2-320"
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"en.20100420.12.2-320"2
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"Indicators reveal that over the last decade, there has been a disconnection between wage and productivity developments in Greece. This has generated competitiveness losses, reflected in persistent current account deficits and a fall in export market shares. Labour market rigidities and wage setting have been identified as an important factor behind the excessive wage growth in Greece and the resulting gap in unit labour costs with its main trading partners.
In recent years, domestic demand has been the main contributor to economic growth, fuelled by buoyant growth in general government expenditure and household incomes. Private final consumption expenditure per capita increased by more than 80% over the last decade. This model has clearly been unsustainable, resulting in the build-up of significant fiscal, which means a high general government deficit and growth debt stock, increasing interest payments and macro-economic, which implies a high current account deficit and external debt outflow of income imbalances.
The increased financing needs of the government have resulted in the public sector absorbing a large part of the available financing, thus ruling out the private sector and adversely affecting the economy’s growth prospects. Economy-wide wage moderation, with public sector wage cuts playing an important signalling role to the private sector, and fiscal austerity measures are thus indispensable to put the Greek economy on a stronger footing by restoring competitiveness and achieving fiscal consolidation.
The Commission is aware that fiscal austerity measures and wage moderation may have a negative short-term impact on demand. Nonetheless, given the current situation that Greece is facing, these measures are necessary to restore market confidence and to lay down the foundations for a more sustainable growth model for the Greek economy in the long term.
Greece has adopted an ambitious programme to correct its deficit and to reform its public administration and the economy. The consolidation measures taken by Greece are important for enhancing fiscal sustainability and market confidence and have been strongly welcomed by the Commission, the Eurogroup, the European Central Bank and the International Monetary Fund.
The courageous measures included in the stability programme and the packages announced in February and March 2010 include not only the envisaged wage cuts through a reduction in allowances paid to civil servants and Easter, summer and Christmas bonuses, but also measures to improve the tax collection mechanism, widen the tax base and increase tax compliance.
In the communication adopted on 9 March 2010, the Commission concluded that Greece is implementing the Council Decision of 16 February 2010 and that, based on available information, the fiscal measures announced by the Greek authorities on 3 March appear sufficient to safeguard the 2010 budgetary targets."@en1
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