In the last lecture we studied labour demand. One factor was the the ease with which workers are hired and fired. The easier it is, the higher is labour demand since firms do not have to worry they will be stuck with unwanted workers when demand for their products falls.
This article is about the latest installment of EU help for Greece. As we mentioned, a worker who loses a job is entitled to a high severance payment. This was considered a problem and so one of the conditions imposed on Greece was introducing "measures making it easier to hire and fire workers".
By the way, the article describes how the process works. If Greece was to borrow in the open market, it would be paying around 20% interest on 10-year bonds. This is way too much so Greece is borrowing from a special fund set up by the EU, to which all EU countries contributed.
As a condition for the borrowing conditions are imposed on Greece. In this case, apart from job market reforms, it is required to reduce deficit by $17 billion.
The conditions have to be approved by the Greek parliament. Then protests erupt in the streets. But, as someone who was asked what he thinks of old age replied: "I prefer it to the alternative." If Greece does not get the help, it would either have to default on debt payments, or stop paying government employees, pensioners, welfare recipients, unemployed etc. Stopping government payments is, essentially, forced borrowing, mostly from the vulnerable part of the population.
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