Brussels, 14/02/2012 (Agence Europe) - On Thursday 14 February 2013, the European Commission clarified statements by Euro Commissioner Olli Rehn on possible cuts in the minimum wage in Greece. Simon O'Connor, spokesman for the Commissioner, said his response to two parliamentarians had been misunderstood because he had not said anything new, but had simply repeated what has been agreed in November 2012 at the updating of the Greek Memorandum. In 2014, a review of the minimum wage is proposed to “improve the simplicity and effectiveness in order to help competitiveness of the economy.” O'Connor said that did not mean new pay cuts. On Wednesday, Greek Finance Minister Yannis Stournaras also denied the rumours circulating in the Greek media about cuts in the minimum wage.
In a letter to EU finance ministers (see separate article), Commissioner Rehn added to the debate about how austerity measures have hit the Greek structural adjustment programme. Two IMF experts admitted earlier in the year that they had got the calculations wrong in relation to austerity's negative impact on growth, which Athens took as a potential opening for a relaxation of the conditions attached to financial aid. “Recent studies on fiscal multipliers are of particularly limited use when it comes to the case of Greece,” writes Rehn, quoting one of the two IMF experts in question, chief economist Olivier Blanchard, who wrote in a Greek newspaper, Ekathimerini, at the weekend that it would be a “fundamental misreading of the historical record” to associate Greece's under-performance with the design of the Memorandum. Rehn highlighted other negative factors that have weighed upon the Greek bailout programme, like “persistent uncertainty and problems with implementation” in the initial years of the pogramme, which blocked the “confidence effect” that would otherwise have softened the recessionary impact of budget consolidation. He said the confidence effect had returned to the eurozone in December. The Greek bailout agreement includes two extra years for Athens to achieve its deficit reduction targets and Rehn's letter comes as Stournaras announced at the end of the Eurogroup meeting on Monday that he would be demanding clarifications from the IMF on the possible impact on the Greek programme of the errors made in calculating the effect of austerity on the Greek economy (see EUROPE 10784). (EL/transl.fl)