Athens Digest 20.07.2018

• IMF urges Greece to expand bailout-era labour reforms

• Pension-cut commitment should be dropped, says minister

• Lavrov visit on hold amid flare-up with Moscow

• Power union promises court action against sale of lignite plants

# The IMF is urging Greece to expand bailout-era labour reforms _ including limits on collective bargaining _ and press ahead with changes to ease collective dismissals and restrict union powers. In its report (Article IV) on the state of the Eurozone economy, the fund also recommended that Greece’s government continue market reforms, further opening up tightly-regulated professions and expand Sunday trading. The report was published a day after Greek Labour Minister Effie Achtsioglou renewed a government commitment to restoring full collective bargaining rights and raising the minimum wage _ reflecting the “fair recovery” pledge made by the Tsipras government ahead of the next general election.

# Greece’s alternate foreign minister says the government should not be bound by a commitment to bailout lenders to impose sweeping pension cuts in 2019. “I am sure the Europeans will not oppose something that is so reasonable … What we want to do is undo an extortion by the IMF,” George Katrougalos told private Thema radio. “One law can be replaced by another.” Katrougalos, who was in charge of pension reform in his previous position as labour minister, said no action is currently planned to scrap or amend the so-called pre-legislated package of reforms for 2019-20. But his remarks were the clearest indication made by a government official so far that changes are being considered.

# Russian Foreign Minister Sergei Lavrov will not visit Athens as planned in the autumn, following a flare-up in tension between the two countries. The decision was reported as Athens awaits Moscow’s response to its expulsion of two. Russian diplomats last week. Prime Minister Tsipras held a 90-minute meeting with Foreign Minister Nikos Kotzias to discuss implications of the crisis. Afterwards, a government official said Athens “remains committed to maintaining good relations with the Russian government but will respond to any provocation decisively.”

# Leaders of the Public Power Workers’ Federation, GENOP-DEI, have promised to take legal action in an attempt to block the proposed sale of coal-fired power plants at Florina and Megalopolis. The government has pledged to proceed with the sale by the Public Power Corporation as part of its bailout commitments. Union representative said legal notices would be sent to potential investors, and protests would be organized to try and prevent visits by bidders to the sites in southern and northern Greece.

On our Radar: Post-Crisis Curse?
Greece is likely to emerge from the bailout era with a growth handicap after failing to create an investment-friendly climate during the eight-year rescue period, according to a leading German research institute. In a report on Greece, the Berlin-based German Institute for Economic Research, or DIW, warned that growth could be limited to below 2 percent in the post-bailout years. Priority, it said, had been mistakenly given to labour market deregulation instead of reforms needed to make investment easier, combat bureaucracy, and shift education and research closer to the needs of the economy. The report said that since 2008, the Greek business economy had suffered a 38 percent decline in gross added value _ hurting the prospects of strong growth in the near future.