Greek Parthenon
Greek Parthenon Parthenon

The leaders of two of three parties that form Greek's governing coalition said Tuesday demands for labor reform made by Greece's lenders are "unacceptable" and that the debate on whether to abide by them, which the government had said last week had been settled, will continue.

The surprise announcement came after Greek financial markets closed Tuesday. Those markets had rallied Monday and early Tuesday on the belief the political issues surrounding the next round of bailout financing from the "troika" of institutions Greece counts as creditors had been settled, the European Union, the European Central Bank and the International Monetary Fund.

"The unacceptable demands by the troika are not going to give any fiscal benefit and will only lead to a further rise in unemployment," Fotis Kouvelis, whose Democratic Left party is part of the governing coalition, said in Athens, according to Greek financial newspaper Capital.

The troika choices lead to the leveling of all employment rights," he added. The statement is a stark change of tone from last week, when, at the conclusion of negotiations with the troika to determine what new austerity measures must be implemented to qualify for the next round of bailout financing, finance minister Yannis Stournaras told London's Financial Times: "We are in full agreement on almost all the issues. ... What remains is to reach a compromise on labor reforms and civil servants, then finalize measures to reform products and services markets in order to bring down prices."

The main bone of contention left, as reported last week, was likely a proposal by the troika to change Greece's labor law, so that it slashed the amount required for workers' severance when private sector companies dismiss employees. The country's labor minister had reportedly threatened to quit last week if the concessions were given but was ultimately overruled by the finance ministry.

While not as histrionic in his comments as his coalition partner, Evangelos Venizelos, of the much larger Pasok party, also said Tuesday he was going back on accepting the demands made by the troika, noting austerity discussions "should not open on fronts such as labor that do not contribute anything to our financial goal."

"Our partners must understand we are not a protectorate," Venizelos added.