Greece promises to boost minimum wage as debt talks loom

Greece promises to boost minimum wage as debt talks loom
Alexis Tsipras was sworn in as Greece's prime minister at the Presidential Palace in Athens.

ATHENS - Greece's leftist government outlined plans to lift the minimum wage on Sunday, continuing a roll-back of the austerity terms of its international bailout and underlining the balancing act it faces to persuade a sceptical Europe to agree a new debt accord.

After a turbulent first week in office, the new government has made clear it wants no extension of the current arrangement with the European Union and International Monetary Fund "troika"when a deadline for the support programme expires on Feb. 28.

Instead, Prime Minister Alexis Tsipras is seeking to persuade European partners to grant Athens some breathing space while a new agreement that would reduce Greece's unmanageable public debt burden of more than 175 per cent of its economic output is worked out.

At home, where Greeks have seen poverty and hardship reach levels unmatched anywhere else in western Europe, the government has wasted little time in making clear it intends to respect its election promises to end years of harsh austerity.

It has halted a series of privatisations it says amount to a disposal of strategic national assets at fire sale prices and announced plans to reinstate thousands of public sector workers laid off by the last government.

On Sunday, new Labour Minister Panos Skourletis said the government would move ahead with its plans to restore collective bargaining and raise the minimum wage, which was cut from 751 euros (S$1,147) a month to 586 euros under the 2012 bailout agreement.

"We have said that reinstating the minimum wage to this level can be a small growth shock for the market," he told Greek television. "When you give people with such low incomes some money, this will be spent for basic needs: bread, milk, a pair of shoes," he said.

Tsipras is expected to give more detail when he lays out his programme in parliament in the next few days. Skourletis said the government would discuss the minimum wage plans with unions and employers before moving ahead.

European partners, including the head of the euro zone finance ministers' group Jeroen Dijsselbloem, have already made clear they doubt the Tsipras government can meet its election pledges while keeping public finances on track but they have yet to see detailed plans.

Finance Minister Yanis Varoufakis is due to kick off a diplomatic offensive in Paris on Sunday, where he meets French counterpart Michel Sapin and Economy Minister Emmanuel Macron before going to London to see British Finance Minister George Osborne on Monday.

Tsipras himself is due this week in Rome and Paris, the two major capitals where his hopes for a sympathetic hearing are highest given France and Italy's calls for an easing in rigid euro zone budget austerity.

He is also due to meet European Commission President Jean-Claude Juncker but has yet to announce plans to meet German Chancellor Angela Merkel or Finance Minister Wolfgang Schaeuble who have refused to consider any writedown of Greek debt.

However, he will have gained some encouragement from a survey on Sunday that showed six in 10 Germans wanted Greece to remain in the euro even if most also opposed a debt writedown.

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