Stuck between looming bankruptcy and a flat-lined economy, Greek politicians agreed Thursday to make a series of cuts that they hope will secure an international bailout, layering more pain onto what is already a deep recession.
But in a sign of the sheer size of Greece's challenges, European officials said the measures were not enough to send over the $173 billion bailout, and they insisted more steps be taken even as Greeks say they are reaching their pain limit. A successful fiscal plan for Greece that satisfies international lenders and private investors holding Greek bonds would remove a major risk to the world economy.
European officials set a Wednesday deadline for the Greek Parliament to approve cuts and find $432 million more to trim from this year's spending. Greece's main political parties must agree publicly that the promised measures will be implemented. And private creditors will still need to reach a deal to take billions of dollars in losses.
Only then would European Union leaders sign off on the overall package.
Under a preliminary draft of the agreement, minimum wages, currently about $1,000 a month, would drop to $780, and even less for those under 25. Health care spending would contract. Other social welfare payments would be cut, and 15,000 public-sector workers would be laid off by the end of the year, followed by 135,000 more by 2015.
Many of the country's biggest state-owned companies are to be sold off in the next few years to raise money, open up parts of the economy previously under state control and loosen regulations on who can join certain professions, among other things.
International officials say the measures will improve Greece's competitiveness, reduce the government's operating costs and help get the country back on track. But they acknowledge the measures could exacerbate the recession in the short term.
Greece's deputy labor minister, Yiannis Koutsoukos resigned Thursday to protest cuts, and protesters swarmed the streets of Athens after the deal was announced. Labor unions planned a 48-hour general strike starting today.