Greece has agreed to cut 15,000 jobs from its government workforce amid growing international pressure to quickly complete deals to cut its debt and impose more unpopular austerity measures.
The Athens government announced the job cuts Monday, hours after German Chancellor Angela Merkel and French President Nicolas Sarkozy sternly warned it. The German and French leaders said Greece would not get a second $171-billion bailout to avert a default on its loans next month if it did not complete its negotiations with private creditors to cut in half the amount it owes them, and cut its government spending.
Greece has been negotiating for weeks with international financial institutions to cut $131 billion of its debt, but has been unable to complete an agreement. At the same time, the Greek government has encountered resistance at home to demands by the European Union, the European Central Bank and the International Monetary Fund that it cut the wages of Greek workers, before securing the new bailout, the country's second in two years.
Watch related video of Papademos after emegency meeting
Merkel said the public lenders' demands "are on the table. Something needs to happen quickly."
Greece's creditors say the wage cuts are necessary to make it more competitive with its trading partners. But Greek unions and employers have resisted the cuts, with the unions calling for a 24-hour strike on Tuesday to show their opposition. One union leader, Stathis Anestis, said European leaders have no right to undermine labor agreements.
"Collective bargaining agreements in the private sector is a European right, and Europe is obligated to respect it, something that has been done up to now," said Anestis. "That is what social agreements are based on. It is the first time there is intervention - rather it is the first time a demand is made for intervention - to annul collective wage agreements, to annul social dialogue, to annul agreements among social partners."
Caretaker Greek Prime Minister Lucas Papademos has been attempting to get the country's socialist, conservative and far-right political parties to agree to support the new austerity measures. International lenders have demanded the broad agreement among Greece's fractious parties, saying they are fearful that after a national Greek election in the coming months, lawmakers would renege on government spending cuts.
Political leaders had planned further negotiations Monday, but postponed the talks until Tuesday.
Greece's precarious financial state was underscored by a new EU report. The EU said that Greece, among the 17 countries using the common euro currency, has the highest governmental debt level compared to its economic output, and that its ratio is worsening.
The EU said the Greek debt level was at 159 percent of its gross domestic product in the July-to-September period last year, up more than 4 percentage points from the previous three months. By contrast, the debt ratio for Germany, Europe's strongest economy, was just under 82 percent of its national economy in the third quarter last year, and 10 other eurozone countries recorded even lower figures.
Some information for this report was provided by AP, AFP and Reuters.