As Greece’s parliament approved an austerity budget on Dec. 23, trade union leaders vowed to continue the agitation that has roiled the debt-stricken country in the last year, promising more strikes in 2011. The budget, pushed through by socialist Prime Minister George Papandreou, administers more of the bitter medicine economists say is required for Greece to save itself from financial collapse: a pension freeze, health care spending cuts and new tax hikes.
Approving the new measures was essential for Greece to secure the next disbursement of a $144.5-billion bailout package by the European Union and the International Monetary Fund. But the policies are driving a wedge between the government and the unions, which have traditionally been close to the socialists, and within the ruling party itself. Tensions are so high, in fact, that some cabinet members have reportedly stopped greeting each other. And many question whether the pain will actually produce any future gain, noting that with public debt projected to hit 160 per cent of GDP in 2013 and unemployment expected to rise to 14 per cent in 2011, a Greek default may be unavoidable.