Greek unions disrupted transport and state services for a second time in as many weeks today after parliament backed prime minister George Papandreou's overhaul of the pension system in a vote that tested the unity of his socialist government.
The plan, which includes lower pension payments and later retirement, was carried by 159 votes to 137 in the parliament in Athens late yesterday.
Mr Papandreou, who expelled three members of his Pasok party for defying him in a May vote on austerity measures, won support even though some lawmakers indicated they may oppose articles that will be voted on individually today. A final vote on the bill will follow.
"It is not the government or Pasok which will be at risk if things remain the same," Mr Papandreou told the chamber before the vote. "Those who are at risk are Greek citizens. We are guaranteeing that the 20-year-olds and 30-year-olds of today will get a pension."
The country's two biggest unions, representing more than two million working Greeks, will hold a rally and march to parliament as lawmakers continue their debate on the bill. Mr Papandreou committed himself to the pension overhaul to secure €110 billion in emergency loans from the European Union and the International Monetary Fund that allowed Greece to avert a default on its debt.
The walkout will ground flights for most of the day, keep ferries docked and shut down banks, hospitals and news media. Parliament workers are also striking, with a skeleton staff assisting today's pension debate.
"Workers don't want to strike every week but they can't stand by and watch their fundamental rights being obliterated every week either," said Stathis Anestis, the deputy secretary of the Athens-based General Confederation of Labor, the largest union for private workers. The law will lead to pensions being cut by at least 12 per cent, he said, compared with a government estimate of 7 per cent.
The pension vote followed the passage in May of €30 billion of austerity measures, including wage cuts and tax increases, that prompted the defection of the three socialist politicians. Their expulsions left Papandreou with 157 seats in the 300-seat legislature, sparking concern that further defections might threaten his hold on power less than a year after he won elections.
"The dissent within the ruling party is increasing and political fatigue is starting to emerge," Giada Giani, an economist at Citigroup in London, said before the vote.
Mr Papandreou, whose union-backed party won the October elections on pledges of higher wages, has cut state workers' salaries and raised sales, fuel and alcohol taxes to combat the country's financial crisis.
The leader argues the measures, aimed at reducing a budget deficit of 13.6 per cent of economic output, are needed to stave off a default and restore investor confidence in Greece.
Greece's central government cash deficit narrowed almost 42 per cent in the first six months, Bank of Greece data showed on July 5th, prompting finance minister George Papaconstantinou to signal the country may even beat a target of bringing the shortfall down to 8.1 per cent of gross domestic product. The European Commission said in a report yesterday that Greece's deficit-reduction plan "was broadly on track."
Overhauling the pension rules, including curtailing early retirement and calculating payments over a longer period of employment, will shore up Greece's public finances, the European Union has said.