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Greece’s parliament on Tuesday voted to scrap plans to cut state pensions, in a motion led by the left-led governing coalition hoping to shore up its flagging support ahead of a general election next year.

Athens agreed two years ago to cut pensions in 2019, in an attempt to placate lenders and get the International Monetary Fund (IMF) to back a third financial bailout the country clinched with its euro zone partners in 2015.

Eventually the bailout, worth up to 86 billion euros, expired in August without IMF assistance, and Athens has said better-than-expected public finances enable it to rescind the planned cutbacks.

The European Commission has approved the government’s decision.

“The time has come for people to be rewarded for their sacrifices,” Prime Minister Alexis Tsipras told lawmakers ahead of the vote, calling the step a “necessary breath for the people of labor … who saw their pensions and their dignity hurt.”

Pensioners, who are in many households the only people with an income due to the highest unemployment rate in the eurozone, have seen earnings shrink by up to 40 percent since Greece toppled into crisis in late 2009.

Tsipras’ term ends in 2019. His Syriza party is trailing the conservative New Democracy by about 10 points in opinion polls.

Since 2010, Greece has signed up to three international bailouts totaling almost 290 billion euros, and will remain heavily indebted for years to come.

The country is monitored by its eurozone partners and the IMF to ensure it does not veer off post-bailout targets aimed at maintaining high budget surpluses in coming years.

New Democracy (ND) accused the government of increasing taxes and handing out benefits from budget revenues to win votes.

“You are wearing the mask of the philanthropist just to tip people from their own savings,” ND leader Kyriakos Mitsotakis told Tsipras in parliament.
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While the United Nations says child labor has fallen sharply in Cambodia’s garment factories, many informal subcontractors using children are escaping scrutiny, activists said Tuesday. 

Better Factories Cambodia, a U.N. International Labor Organization and World Bank initiative, found just 10 cases of child labor, down from 74 in 2014, in its latest survey of almost 500 licensed garment export factories. 

However, campaigners said that children turned away from factory jobs may be working elsewhere, including homes where garments are produced by subcontractors. 

“There have been major strides in eliminating child labor” in factories, said William Conklin, Cambodia country director for the Solidarity Center, a U.S.-based nonprofit promoting workers’ rights. 

“But what it doesn’t address is the issue in the subcontract area. That is a big, unknown area in Cambodia.” 

Cambodia’s garment industry is the largest employer in the country. About 40 percent of its GDP comes from garment exports, and the sector employs more than 800,000 workers. 

Cambodian factories supply global brands including Gap, Sweden-based H&M, and sportswear brands Nike, Puma and Adidas. 

The ILO report noted that child labor usually involves workers under age 15 who have presented false identity documents to get factory jobs. 

Trapped in bonded labor

Tens of thousands of Cambodian families, including children, are trapped in bonded labor, forced to make bricks in return for kiln owners’ settling their debts, British researchers said in October. 

Child workers are often from families who have had to migrate because climate change has hit their harvests, said Dy The Hoya, a program officer with the Phnom Penh-based Center for Alliance of Labor and Human Rights. 

“I do not see any change in the informal sector,” he told the Thomson Reuters Foundation. 

Esther Germans, a program manager with ILO, said the organization has no data on subcontractors. 

“It is generally assumed that working conditions are worse and one can expect more incidences of child labor since there is less scrutiny,” she said in emailed comments. 

Companies are facing growing scrutiny to ensure their operations are slave-free as rising demand for cheap clothing fuels labor exploitation in factories worldwide. 

The government, which has come under fire for its human rights record, said in October that it would increase the monthly minimum wage in the textile sector to $182 in January from $170. 

H&M, which hosted a summit on fair wages in the fashion industry in the Phnom Penh on Tuesday, said wages in Cambodian factories producing its clothing were 24 percent higher than the minimum.
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France will overshoot the European Union’s budget deficit ceiling next year without deeper spending cuts after President Emmanuel Macron caved in to anti-government protests.

Macron announced wage increases for the poorest workers and a tax cut for most pensioners on Monday in an effort to quell a near month-long public revolt.

But the measures will leave a 10 billion euro ($11 billion) hole in the Treasury’s finances, pushing France back over the EU deficit limit of 3 percent of national output and dealing a blow to Macron’s reformist credentials.

“We are preparing a fiscal boost for workers by accelerating tax cuts so that work pays,” Prime Minister Edouard Philippe told parliament. “That inevitably has consequences on the deficit.”

Philippe did not give details on the impact of the concessions on public finances or possible spending cuts, saying only that the government aimed to keep spending from increasing.

“Under all likelihood, the 2019 public deficit will print above the 3.0 percent benchmark,” Societe Generale economist Michel Martinez wrote in a research note.

Any failure to respect the EU deficit ceiling could shatter France’s fiscal credibility with its European partners after Paris flouted it for a decade before Macron took office. And any sign of leniency from Brussels could complicate the European Commission’s tense discussions with Italy about keeping its deficit down.

Italian Deputy Prime Minister Luigi Di Maio said Paris should be subject to the same treatment as Rome and now risked EU censure over its budget concessions.

“If the deficit/GDP rules are valid for Italy, then I expect them to be valid for Macron,” Di Maio said.

France’s 10-year borrowing costs climbed to their highest level compared with Germany in a year-and-a-half on Tuesday.

Europe’s Scope credit rating agency said it was unlikely Macron would be able to push through reforms of France’s costly pension and healthcare systems if he continued to lose public support.

Budget Minister Gerald Darmanin said Macron’s concessions would amount to 10 billion euros, including the cancelling of energy tax hikes announced last week.

Darmanin told senators the government now expected a budget deficit of 2.5 percent of GDP in 2019, excluding the one-off impact of a long-planned payroll tax rebate scheme becoming a permanent tax cut at a cost of 20 billion euros.

That compares with a previous 2019 deficit/GDP forecast of 1.9 percent without one-offs, or 2.8 percent overall. The new, higher underlying deficit thus implies pushing the overall number towards 3.4 percent next year without measures to rein in spending.

Moreover, the “yellow vest” protests are slowing economic growth. Two opinion polls on Tuesday showed roughly one in two French people think they should now end their protests.

An Elysee official said on Monday France had some wiggle room on spending if the tax rebate was not taken into account.

The European Union’s executive arm is to make a final assessment of France’s 2019 budget in the second quarter of next year when it releases new economic forecasts, a spokesman said.
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