Touting recovery, Greece hikes wages, tests market return - InfoNews

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Touting recovery, Greece hikes wages, tests market return

People wait at a bus station in central Athens, on Monday, Jan. 28, 2019. Greece announced plans to issue a 5-year bond, in the first market test since the end of its international Bailout last August. (AP Photo/Petros Giannakouris)
January 28, 2019 - 6:59 AM

ATHENS, Greece - Greece announced on Monday plans to return to bond markets and to increase the minimum wage by more than expected, five months after exiting its bailout program and ahead of elections.

Authorities unveiled plans to issue a 5-year bond, a first market test since the end of Greece's international bailout in August.

In a televised address, Prime Minister Alexis Tsipras said the minimum wage would be increased by nearly 10 per cent starting next month — from 586 euros per month to 650 euros. A lower wage category for under-25 year-olds was scrapped.

"This is an essential but also a symbolic action — something owed to the people who bore the brunt of the (country's) bankruptcy and fiscal adjustment, whose lives, prospects and expectations were immersed into the darkness of the crisis," he said. "Now that the country is coming out of the crisis, we can gradually begin to heal the wounds."

The increase, while slightly larger than expected, does not restore the minimum wage to the 751-euro level it was in 2012, when huge cuts were imposed as part of Greece's bailout agreements. The increase, also affecting pay scales and state benefits, will take effect next month.

Meanwhile, the bond auction is expected to take place this week and raise up to 3 billion euros ($3.4 billion).

Greece has held off returning to debt markets due to financial turbulence created by a budget crisis in Italy.

But borrowing rates eased in recent weeks and the government last week survived the threat of collapse over a vote in parliament to normalize relations with neighbour Macedonia. Representatives of Greece's international creditors also completed an inspection in Athens last week.

The yield on Greece's 10-year-bond edged down on Monday to 4.06 per cent while shares on the Athens Stock Exchange were unchanged.

Tsipras, whose left-wing government is trailing conservatives in opinion polls, is facing local government and European Parliament elections in May and must call a general election before October.

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News from © The Associated Press, 2019
The Associated Press

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