Austerity measures driving unrest

Protesters in Valencia, Spain, vent outrage at plans to raise the retirement age to 67. Photo / AP

A wave of industrial and social unrest is building across Europe as workers resist attempts by governments and private companies to impose austerity policies, drive down wages and rescue some nations from near-bankruptcy.

Huge protest rallies took place in cities across Spain yesterday; today a general strike could paralyse Greece while industrial action at French airports and oil plants as well as the narrowly averted stoppage at Germany's Lufthansa promise to be just the start of the greatest demonstration of public unrest seen on the continent since the revolutionary fervour of 1968.

Europe's industrial economy is not clear of recession yet either and with unemployment rising and demands for austerity growing, Europe's workers are becoming increasingly restive.

Italy's beleaguered car giant Fiat abruptly suspended production across all its Italian plants this week, laying off a workforce of 30,000 people for two weeks and further closures are forecast for next month.

There are signs meanwhile that confidence is sagging under the weight of unrelenting media gloom about the Greek crisis. The Governor of the Bank of England, Mervyn King, voiced his concern that Europe's recovery has now stalled.

By far the most extensive disruption today will be in Greece, a eurozone member state, where there have already been wildcat strikes and loud protests against the Prime Minister George Papandreou's efforts to rein in Greece's yawning budget deficit, the worst in the eurozone. Communist party-backed protesters tried to blockade the Athens stock market yesterday and strikers will today close down air, rail and maritime transport networks, their anger stirred by draconian cuts to welfare benefits.

The action will also shut schools, government offices and courtrooms, with disruption to banks, hospitals and state-owned companies. In a tragic-comic touch, Greece's tax inspectors also took industrial action against their Government's attempts to fix its finances.

John Monks, secretary-general of the European Trades Union Confederation, warned yesterday that unions across the EU were pushing back against austerity plans that were "socially unacceptable" and which would only exacerbate the recession by fuelling unemployment.

Analysts say that Greece ought to be able to raise about €3 billion ($5.9 billion) in the markets this week, albeit at high interest rates of more than 5 per cent. A much bigger challenge will be to find the €25 billion in April and May that Athens is due to repay on maturing bonds, short-term bills and interest payments. The next crunch for Greece will be when Papandreou has to meet fellow EU leaders on March 16 to convince them he is making progress towards slashing the deficit.

But now Spain - another of the so-called "PIIGS" group of heavily indebted nations comprising Portugal, Italy, Ireland, Greece and Spain - is also facing determined resistance to the Zapatero Government's attempts to get Spanish public finances on track. Many observers fear a Spanish budget crisis much more than a Greek one, simply because the Spanish economy is about five times larger than Greece's, and even the resources of the richer eurozone members, principally Germany, may be insufficient to save it. In any case, constitutional and political obstacles to bailouts in Germany show no sign of being removed, adding to the underlying strains that are destabilising the single currency area.

Across Spain's major cities last night, trade unionists led protest rallies against plans to raise the retirement age to 67. Rallies were taking place in Madrid, Barcelona and Valencia, with organisers hoping up to 50,000 would turn out in the capital alone.

- INDEPENDENT