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Page last updated at 13:28 GMT, Tuesday, 9 February 2010

Greece plans to ban early retirement

A man walks past the Athens Stock Exchange in Greece
Greece is struggling with a gaping deficit and heavy debt

Greece's government intends to raise the national pension age and ban early retirement as it tries to tackle its huge budget deficit.

The socialist government said it wanted to increase the average retirement age from 61 to 63 by 2015.

The steps would be part of a series of austerity measures aimed at curbing the country's deficit and national debt.

But the moves have angered many of the unions, which have scheduled strikes in protest.

Civil servants - who are among those most affected by the pension reforms - are due to walk out on Wednesday this week.

Farmers have already been protesting for weeks, demanding more government assistance, and the country's biggest union, GSEE, is set to hold a mass walk-out on 24 February.

The unions complain the Greek government has bowed to the markets and pressure from the EU.

Reforming its pension system has been outlined by the European Commission as a priority area for Greece as it struggles to save its economy.

Salary freeze

Labour Minister Andreas Loverdos said the pension system would be broke in five years unless changes were made.

"These reforms are not just tinkering, they constitute a major overhaul to make the system viable in the coming decades," he said.

"We are changing the pensions system in order to keep it alive."

Last week, Greek Prime Minister George Papandreou announced a number of austerity measures including a public sector salary freeze and a hike in petrol prices.

George Papandreou (2 February 2010)
PM Papandreou has announced a raft of austerity measures

Further measures include the non-replacement of departing civil servants, and tax collectors recovering billions of euros lost to tax evasion.

Greece is one of several EU countries struggling with a gaping deficit and heavy debt, preventing them from spending their way out of recession.

Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow. Its debt is about 300bn euros ($419bn, £259bn).

The possibility of Greece or one of the other stricken countries being unable to pay its debts - and either needing an EU bailout or being forced to abandon the euro - has been called the biggest threat yet to the single currency.



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