My Own Advisor

 

Image on this site courtesy of The Daily Star, Lebanon.

Be thankful Canada, austerity doesn’t live here.

We’ve all heard about the debt crisis in Greece.   Throughout 2010 and 2011, mass demonstrations occurred to protest proposed measures.  Things turned violent in October 2011 when the Greek Parliament finally, but barely passed austerity measures to keep bailout Euros flowing in the aftermath of the Great Recession.  Now, early in 2012, the crisis has returned as leaders of France and Germany told Greece to move forward with promised economic changes “or else” – lose the next instalment of monies badly needed to keep Greece above water.  This dire warning came amid increasing signs that Greece would not be able to make the structural changes to its economy that its leaders had promised last year.

The financial news or better put trauma in Greece got me thinking, how bad is it?

What does austerity in action feel like?

From what I found out, it seems like a brand new way of living for years if not decades.

Here are some of the austerity measures getting implemented in Greece courtesy of a BBC report: 

Taxation:

• A levy between 1% and 5% of income for all households will be applied.   
• Higher property taxes will be introduced (final amounts TBD).
• The VAT rate for restaurants and bars will rise to 23% from 13%.   
• Luxury levies will be introduced on pools and cars.
• Excise taxes on fuel, cigarettes and alcohol will rise by 33%.

Public Sector Cuts:

• Nominal public sector wages will be cut by 20%.  
• Wages of employees of state-owned enterprises will be cut by 30% then capped.
• All temporary contracts will be terminated.
• Only 1 in 10 civil servants retiring this year will be replaced.  Only 1 in 5 in coming years.

Spending Cuts:

• Defence spending will be cut by 200 million euros starting in 2012 and over 300 million euros each year from 2013 to 2015.
• Health spending will be cut by over 300 million euros starting this year and almost 2 billion euros in 2012-2015.
• Education spending will be cut by closing or merging 1,976 schools.   (My Own Advisor – Wow).

Government Benefit Cuts:

• Social security will be cut by over 1 billion euros this year and next year until 2014.
• All monthly pensions above 1,000 euros will be cut by 20%.  
• Retirees under age 55 will lose 40% of their pension over 1,000 euros.
• The statutory retirement age will be raised to 65, so 40 years of work will be a requirement for a full pension and full benefits.

Privatization:

• Sell the following operations in whole or in part:
• Port operators Piraeus Port and Thessaloniki Port
• Hellenic Telecom to Deutsche Telekom
• Athens Water
• Refiner Hellenic Petroleum
• Airports
• State land
• Mining rights

We’re not even close to needing the majority of these measures to balance our financial books in Canada.  The government has its fiscal challenges, no doubt, but overall we continue to have it pretty darn good.

Count yourself lucky Canada.   With some good financial management, under every household and every government roof, austerity won’t live here.

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