Angry protesters blockaded Greek ministries on Tuesday despite appeals from the finance minister for the public to rally around the tough measures the Athens government needs to achieve fiscal targets and avert default on its colossal debt.
World financial markets have been reeling since Athens said on Sunday that a deeper than expected recession means it will miss its 2011 deficit target, despite austerity steps meant to solve Europe's worst debt crisis.
Fears of a debt default drove the Athens stock exchange to an 18-year low on Tuesday. Greek bank stocks fell as much as 9.5 percent. The euro hit a nine-month low against the dollar and a 10-year low against the yen.
There is very big turmoil and very deep anger in society, the secretary general of public sector union ADEDY, Ilias Iliopoulos, told Reuters as he took part in Tuesday's protest.
The Socialist government, which came to power exactly two years ago on a pledge to help the poor and tax the rich, is facing growing anger from voters hit hard by a series of tax hikes, wage cuts and job losses.
Greece's Finance Minister Evangelos Venizelos said on Tuesday that even his new 2011 deficit target of 8.5 percent of gross domestic product could slip by another half percentage point unless the public unites behind his unpopular plans.
If state mechanisms do not work and if we do not have the national cohesion and solidarity that is required, obviously we may have problems with our 8.5 percent target, he told a news conference.
National cohesion and solidarity, however, are in short supply. Many of the measures still must be approved by parliament, and Greek labor unions vehemently opposed to them are hoping to weaken the government's resolve with demonstrations and strikes over the next few weeks.
A major national strike, led by the public sector union which represents 500,000 workers, is planned for Wednesday.
Tuesday's blockade of government buildings, including the finance, labor, agriculture and development ministries, follows similar protests last week, when state workers tried to disrupt talks between the government and EU and IMF inspectors.
Police said there was disruption at the ministries on Tuesday but work was not halted inside. Police were on hand, especially at the finance ministry, but there were no reports of serious clashes. There were bloody battles between riot police and protesters in central Athens in June.
Venizelos's news conference had to be moved from the finance ministry to another building because of the protests.
About 20 protesters from communist-affiliated labor union PAME briefly occupied the office of the labor minister.
Planes and trains will be halted on Wednesday, schools will be shut and hospitals will have only limited staff as workers walk off the job to protest against austerity.
TENSE TALKS WITH TROIKA
Tense negotiations with IMF, EU and European Central Bank inspectors, known as the troika, are still under way, with the inspectors focusing on forecasts for 2013 and 2014, seen as crucial to assess whether Greece's debt is sustainable.
First, the troika must agree to free up an 8-billion-euro loan tranche to cover the Greek government's running expenses.
Greece had said it needed the tranche this month or it would run out of cash, but euro zone finance ministers said on Monday the decision could be put off until mid-November, giving the inspectors more time to press Greece to enact its reforms.
Venizelos confirmed that Greece had enough cash to wait until next month for the loan tranche. He did not explain the discrepancy with earlier assessments.
The euro zone ministers are also reviewing the size of the private sector's involvement in a second international bailout package, a move that could undermine the aid program and hasten the threat of a default.
In a meeting with Labor Minister George Koutroumanis, troika officials raised the issue of lowering the minimum wage of about 740 euros a month, to boost firms' competitiveness, further angering unions.
They operate like the crusaders of a neo-liberal obsession, Yannis Panagopoulos, president of private sector union GSEE, said on NET radio. They will have cheap labor, but with this ... the country will sink into a deeper recession.
The government said on Monday that Greece will remain in recession for a fourth year in 2012, threatening its efforts to put its finances back on track and claw its way out of debt.
The economy will shrink by 2.5 percent in 2012, according to the budget draft, which also sees the creation of a primary surplus for the first time in years, thanks to severe state spending cuts and tax hikes.
(Additional reporting by Angeliki Koutantou; Writing by Ingrid Melander and Peter Graff, editing by Peter Millership)