Strike to paralyse Greece

Reuters

STRIKE: A poster calling for public sector employees to participate in a 24-hour strike is seen at central Syntagma square in Athens.

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Greek public transport was halted, flights grounded and state hospitals left with emergency staff only on Thursday as workers held yet another general strike to protest painful spending cuts.

Debt-plagued Greece has faced a new wave of labor discontent since the Socialist government's harsh new austerity plan was introduced last week in an effort to trim its ballooning deficit and shore up the support of skeptical markets.

Under intense pressure from the European Union to quickly show fiscal improvement, the government announced an additional savings through public sector salary cuts, hiring and pension freezes and consumer tax hikes.

The cutbacks, added to a previous euro 11.2 billion ($NZ21.8billion) austerity plan, seek to reduce the country's budget deficit from 12.7 percent of annual output to 8.7 percent this year. The long-term target is to bring overspending below the EU ceiling of 3 percent of GDP in 2012.

The plan sparked a wave of strikes and protests from labor unions whose reaction to the initial austerity measures announced earlier this year had been muted. Thursday's strike, which shut down all public services and schools, left ferries tied up at port and suspended all news broadcasts for the day, was the second major walkout in a week.

The government says the tough cuts are its only way to dig Greece out of a crisis that has hammered the common European currency and alarmed international markets - grossly inflating the loan-dependent country's borrowing costs.

But unions say ordinary Greeks are being called to pay a disproportionate price for past fiscal mismanagement.

"They are trying to make workers pay the price for this crisis," said Yiannis Panagopoulos, leader of Greece's largest union, the GSEE.

"These measures will not be effective and will throw the economy into deep freeze."

Journalists, teachers, state hospital doctors and air traffic controllers are among those striking, while officers from the police, fire service and coast guard plan to join protest rallies scheduled for later Thursday.

A general strike last Friday was marred by violence during a large protest march. Riot police used tear gas and baton charges against rock-throwing protesters, who smashed banks and storefronts, while left-wing protesters roughed up Panagopoulos as he was addressing a rally.

The labor unrest could spark fears that the government will have trouble in implementing its new measures and translating its projected savings into reality.

Greece insists it doesn't need a bailout, and its European partners are reluctant to fund one. But it has called for European and international support for its program, saying that unless it receives it and the cost for it to borrow on the market falls, it could appeal to the International Monetary Fund for help.

On Wednesday night, Deputy Prime Minister Theodore Pangalos said Greece could bypass the costly process of borrowing from edgy markets by urging international institutions to buy its bonds at a set interest rate.

"We want, if there is an unjustified speculative attack against Greek bonds, to know that one of these institutions that have the substantial means to absorb such market products will come and say 'look here, I am buying Greek bonds at this price, with this interest rate,"' Pangalos told private Mega TV.

He did not say which institutions he was referring to, or elaborate on the interest rate.

Markets think some kind of rescue would be organized if default looms. Speculation has focused on possible guarantees for Greek bonds or help from state-owned banks.

- AP