Italy, Greece and Spain begin to freeze wages

Eurozone economic problems are growing with each passing day

In brief: The European economy is stagnating. Three countries from the euro area has ceased to pay salaries.

On the streets of the Old World is hot, but Europe freezes. Greece, Italy and Spain have started to freeze wages in the public sector. Hungary freeze government spending. Not without reductions – cut jobs, social benefits, state and local budgets. The race on the road to strict financial savings kicked off when the markets began agitation against the background of the financial situation in several European countries, starting with Greece.

The situations in all countries are different. However, the measures taken to reduce the budget are very similar. Particular attention is paid wages in the public sector, social security benefits, pension plans and tax returns of the population. Changes will not easy – given the many protests in some countries. Many believe that the time came, and now the austerity measures threaten to undo, and so a slight economic recovery. Only time will tell who is right. Meanwhile, your attention is invited to a brief overview of the main measures to be taken according to the International Monetary Fund and published reports. Greece: Greece’s goal – to reduce to 2014. the current annual deficit of 13.6% of GDP to 2.6%. Greece is the least competitive member of the European Union, while the country’s most “generous” salaries and pensions. According to the IMF, salaries and social allowances account for 75% of public expenditure, the rate of increase outpaced the growth of productivity. Therefore, in addition to reducing discretionary spending, Greece expects to reduce jobs in the public sector wage freeze and cancel the additional two months’ salary, traditionally paid for most state workers. Greece also intends to increase the period of retirement, which varies depending on the profession and seniority. It is proposed to raise this threshold to five or ten years, with a minimum retirement age for all of 60 years. There will also be reduced pension payments to a percentage of retirement income, resulting in a higher-income retirees will apply an additional 10% load. In Greece, may be increased value-added taxes and taxes on fuel, cigarettes and tobacco.

Hungary: Introduction to financial constraints was the main condition of the transaction between Hungary and the IMF in 2008. However, the public (and, many believe, exaggerated) comparison of the new prime minister in the country of the financial situation with the situation in Greece, led Hungary to expand the range of restrictions … and accelerate their implementation. So in addition to obtaining assistance from the IMF, the government promised to reduce the cost of salaries in the public sector by 15%, to introduce a new three-year tax on bank profits and freeze government spending.

Ireland: The Emerald Isle is going to 2015. reduce the annual deficit to about 5%, compared with the current deficit of more than 12%. In Ireland, the campaign for austerity, was launched over a year ago. The measures provided for in this campaign include raising taxes, reducing benefits in the public sector by 5-15%, reduction of social benefits and the volume of health services, as well as other cost reductions.

Italy: The immediate challenge facing Italy, – to reduce the budget for 2011-12g. at 24 billion euros. The IMF stated that “the planned consolidation is not of sufficient magnitude.” There are going to a three-year wage freeze in the public sector, to replace only 20% of the number of retiring public sector workers, to reduce the municipal and regional budgets and to strengthen measures to combat tax evasion taxes. There will also be increased retirement age, about 6 months, but the average age will continue to be 61 years old.

Portugal: The Portuguese Government intends to 2011. reduce the annual deficit to 4.6% of GDP from the current 7%. The country plans to raise value added tax, income tax and profit tax at 1-2.5%. Also at 5% will be reduced by payments to senior staff of the public sector and politicians. There will also be frozen payments to employees of public service.

Spain: The Spanish government has promised to cut next year’s annual deficit from the current 9.3% to 6% of GDP. Short-term austerity plan, will generally save 15 billion euros, this includes the reduction of civil servants’ pay by 5% in 2010. and the freezing of salaries in 2011. According to “The Economist”, the government will replace only 10% of retiring public sector workers, except for health, education and medical care for the elderly.

France: French Prime Minister Francois Fillon said that by 2013. annual deficit of the country will be reduced from the current 8% to 3% of GDP. In total, the deficit will be reduced by 100 billion euros. According to published reports, of which 85 billion euros would be reduced by reducing costs, eliminating tax loopholes and by profits from anticipated economic growth. The remaining $ 15 billion – by the end of the program of temporary incentives. In addition, French President Nicolas Sarkozy said the reduction of government operating costs by 10%. It is expected that France announced plans to reform the pension system of the country, which, presumably, would be unprofitable for several future decades. Perhaps an invitation to raise the retirement age, causing serious protests from trade unions. Currently, citizens of France, a total had at least 40 years, may retire at age 60 and receive a full pension.

Germany: Despite the fact that Germany has the strongest economic position among all countries of the Eurozone, and Chancellor Angela Merkel to take preventive measures. She announced actions aimed at ensuring the austerity that would allow for 2013. reduce the country’s deficit to 3%, compared with the current 5%, and reduce costs to 2014. 80 billion euros. These measures include the reduction of social benefits and greater control in the means-tested for the issue of unemployment benefits. In addition, the number of jobs in the public sector will be for four year reduced by 10000, will also reduce the number of German armed forces. Germany also plans to limit tax exemptions, taxing for the producers of nuclear fuel and the tax on financial transactions. UK: When the new government will issue an emergency budget, the British will understand that the Prime Minister, David Cameron had in mind, saying that attempts to reduce the UK deficit will affect the entire population for many years and possibly decades. It is the duty of Great Britain is 1 trillion. dollars, and after 5 years it may double. At the same annual interest payments will increase to 100 billion dollars, up 67% compared with the current index. Cameron said the reductions in the public sector, while he noted that over the past few years, the sector expanded, while the private sector, on the contrary decreased by 3.7%. “We’re going to restore the balance of [the] private sector – and the process promises to be painful,” – noted Kemeron.On also stressed that the most vulnerable will be protected. Health will receive a tangible public support. Additional cost-saving measures will be announced in November, followed by open public debate on the development of the country’s budget in the long term.

Ukrainian Globalist
2010-06-17 10:37, Economics.

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