The Greek economy will only return to growth in 2014 after a four-year recession that will shrink output by 17 percent, EU officials said on Tuesday, warning Athens it needs to cut wages further to bring its public debt to manageable levels.
Speaking hours after euro zone finance ministers agreed a 130 billion euro ($172 billion) bailout for Athens, officials said Greece must cut another 150,000 jobs and also bring labor costs down by 15 percent over the next three years.
“We expect Greece to resume growth in 2014,” an EU official who requested not to be named told reporters. “We see a contraction of 4.5 percent this year and stagnation in 2013. That is a shrinkage of more that 17 percent over four years,” the official said.
Officials said the Greek minimum wage was still higher than Portugal and Spain. Greek labor costs have risen by more than 30 percent over the past decade, the largest jump in the euro zone, compared to 5 percent in Germany, according to EU data.