World Economy

Wage, Pension Cuts Cannot Help Greece

Wage, Pension Cuts Cannot Help Greece  Wage, Pension Cuts Cannot Help Greece

The president of the European Parliament Martin Schulz argued that Greece needs debt relief and that the solution cannot be further wage and pension cuts, in an interview for Global Conversation on Euronews.

In his interview, Schulz noted that debt relief was discussed for the first time at the Eurogroup on Monday and argued that both the European Commission and Germany–even Finance Minister Wolfgang Schauble–are open to such a debate. Crucially though Schulz stressed that wage and pension cuts cannot be the solutions and that Europe must recognize that Greece achieved a primary surplus in 2015.

When asked whether the austerity measures implemented in Greece were excessive, the president of the European Parliament responded that he was never a major proponent of such measures.

He further noted that while budgetary consolidation and debt restructuring are necessary, without financial growth and employment to raise the GDP, the situation will not be rectified in the long term.

Meanwhile, Eurogroup president Jeroen Dijsselbloem said on Wednesday, “The saddest thing about Greece is that it has a lot of wealth, but it is hidden, or transferred to London.”

The Dutch finance minister spoke at the Oxford Union, the debate forum of Oxford University. He said, inter alia, that Greeks hide their wealth, implying there is a lot of tax evasion.

He also said that it is time for Europe to discuss lightening the Greek debt. Dijsselbloem said that there will not be a debt haircut per se, but European institutions will start examining other methods of easing the debt on Athens.

The Greek debt, Dijsselbloem said, has become substantial and the economy is unstable, generating a “huge issue.” He also said Europe doesn’t want the Greek crisis to continue because it will have repercussions in Europe as well.

Regarding the austerity measures that Greece has to take in order for the economy to recover, Dijsselbloem said “they are harsh, but they must be implemented.”

“Greek citizens must pay taxes, something that is not very pleasant in a crisis, but it must be done,” he said.