Global tensions over Greek pensions

In this photo illustration plastic, toy construction workers stand around a one Euro coin.

STEVE CHIOTAKIS: The Greek parliament today faces a vote to keep its government in power. It's the first critical step the country needs to collect a $17 billion loan and avoid default. Other European countries are demanding Greece cut a lot of its government spending.

Marketplace's Europe correspondent Stephen Beard is with us live from London this morning to put Greek government spending in a bit of context for us. Hi Stephen.

STEPHEN BEARD: Hello Steve.

CHIOTAKIS: Now, Greece got into this mess by borrowing and spending money. What did they spend it on?

BEARD: Well, $35 billion went on the Olympics. There have been monumental examples of waste, though. Civil servants paid a bonus just to show up at work. Extra payments if they use a computer. And scores of seemingly pointless state-funded committees including one you may recall which was managing a lake that had dried up in the 1930s. But the real anger in Germany, which coughs up a lot of the money to bailout Greece is over Greek pension arrangements, which are rather more generous than those in Germany.

CHIOTAKIS: And Germans are angry that Greeks are retiring at age 61. The retirement age here in the U.S. is 65, right? So why are Greek so mad about this?

BEARD: Well, I think they understand that this model is unsustainable. But over the past year or so, the Greek government has made deep cuts in public spending. It has made a lot of changes.

But according to Simon Tilford at the Center for European Reform, the anger on the streets is not from an outrage sense of entitlement. It's because the austerity measures have tipped the economy into deep recession.

SIMON TILFORD: The people protesting in Athens now are not people on generous public sector pensions or even people who are to retire soon on those generous public sector pensions. But they're young, unemployed people.

Unemployment for young people is 43 percent in Greece. So it's the economic effects of the austerity that's causing the anger.

CHIOTAKIS: Marketplace's Stephen Beard reporting from London. Stephen, thank you.

BEARD: OK Steve.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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