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IMF Chief Asks Greece To Cut Private Sector Wages

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Greece will have to cut wages in the private sector in order to boost its competitiveness, IMF’s head Dominique Strauss Kahn argued.

It is the only way to sell what they are producing vis-à-vis their euro zone neighbours, he said in an interview with Euronews.

“Why is it so difficult for Greece to find growth? Because they have a problem of competitivity. What does that mean? That means that what they produce is more expensive than the same goods or services provided by other countries.”

“That’s why they have to cut wages, which is terribly painful but absolutely necessary because it is the only way to sell what they are producing when other countries have lower costs, not those underdeveloped countries in Asia, Africa or Latin America, but their very neighbours in the Euro zone. Costs in Greece are 20 to 25% over the German costs for instance and this difference has to be fixed,” he said.

“When a country’s assets, like houses or offices, do not find buyers or their value has tumbled, debt, either public or private, becomes unbearable. The only solution is cutting spending or finding new revenue. Easy to understand, but difficult to do.”
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