Greek coalition partner to vote against labour reforms

ATHENS Thu Oct 25, 2012 10:39pm BST

Greece's Finance Minister Yannis Stournaras (C) listens to reporters' questions as he leaves the Prime Minister's office in Athens October 25, 2012. REUTERS/Yorgos Karahalis

Greece's Finance Minister Yannis Stournaras (C) listens to reporters' questions as he leaves the Prime Minister's office in Athens October 25, 2012.

Credit: Reuters/Yorgos Karahalis

ATHENS (Reuters) - A junior partner in Greece's coalition government on Thursday said it would vote against labour reforms demanded by foreign lenders, blocking a deal on an austerity package essential to unlock further aid for the near-bankrupt country.

"The only obstacle to an agreement is the Democratic Left's stance," Finance Minister Yannis Stournaras told reporters. "I hope that eventually they will agree."

The small Democratic Left party, which has long opposed the reforms on the grounds that they undermine labour rights, made its statement after examining new concessions Greece's government gained from lenders this week.

After an executive committee meeting late on Thursday, the Democratic Left said it stood by its opposition and asked the troika of the European Commission, European Central Bank and International Monetary Fund lenders to withdraw the reforms.

"We refuse to accept the troika demands on labour issues," the party said in a statement. "We call on our European partners to withdraw the troika demands that scrap Greek workers' rights."

The statement confirmed the party leader Fotis Kouvelis's comments to Reuters late on Wednesday. He said he was not budging from his stance despite concessions from lenders.

Greece's government has been locked in talks internally with allies and with its lenders for months on the 13.5 billion euro package of austerity measures required to secure fresh aid.

Athens says talks have been largely wrapped up and that the package is ready for a parliamentary vote next week, with the leftist party's position the only hurdle left.

Stournaras had suggested on Wednesday that the package would be split into two separate bills on spending cuts and labour reforms which would allow the Democratic Left to vote against the reforms without jeopardizing the entire austerity package.

But Athens now plans to put the cuts and reforms together in a single take-it-or-leave-it bill, Stournaras said, in a move apparently designed to pressure the Democratic Left into backing the entire package.

"If the measures are submitted in one article we will not vote for it," said a Democratic Left official, who declined to be named.

EXHAUSTION AND FLU

The small leftist party, which commands 16 deputies in parliament, has repeatedly said it does not want to topple the government but that it cannot vote on reforms that undermine labour rights which have already been eroded.

The party has also suggested that the labour reforms be postponed and re-considered later in 2013, when there are signs of improvement in the recession-hit economy, the party official said.

The other junior partner in Greece's ruling coalition, PASOK, has also criticized the labour reforms but has stopped short of saying it will vote against them. It too is seeking further concessions from the troika on wage and pension issues, a party aide told Reuters.

EU/IMF lenders have also said some issues remain before a deal is concluded. Euro zone officials meeting in Brussels on Thursday were expected to discuss the austerity package as well as Greece's long-standing plea for an extra two years to meet budget goals set out in its bailout programme.

Political opposition to the labour reforms is one snag holding up an extension deal, a euro zone official said.

The austerity package, which has triggered street protests and deepened public anger, includes wage and pension cuts, a drastic reduction in healthcare spending and welfare benefits and a long list of structural reforms to overhaul the economy.

Earlier on Thursday, Stournaras cancelled an appearance in parliament after going to hospital with flu-like symptoms and exhaustion. The minister was in parliament until the early hours of Thursday after being locked in all-night talks with the lenders the night before.

"He went to the doctor and was diagnosed with exhaustion and severe flu," said a finance ministry spokesman.

(Additional reporting by Lefteris Papadimas; Writing by Deepa Babington; Editing by Stephen Powell)