Greek workers staged a 24-hour strike on Thursday bringing the transport system to a standstill in protest against the government's decision to intensify its austerity drive to secure more aid and save the debt-laden country from bankruptcy.
Tens of thousands of angry union members prepared to march later on Thursday to parliament in Athens as part of the first big nationwide protests since late June when daily demonstrations culminated in bloody clashes with police.
Striking taxi drivers and bus, metro and rail workers forced commuters to use their own cars, triggering kilometres-long traffic jams and stranding tourists at hotels in Athens' ancient city centre.
"The situation is dramatic, all major streets are jammed," said one traffic police official, who declined to be named. A stoppage by air traffic controllers delayed 100 flights by up to four hours and dozens more in an out of Greece were cancelled.
After European Union and International Monetary Fund inspectors made clear they were losing patience over the government's failure to meet the targets of a bailout, the cabinet agreed on Wednesday to front-load austerity measures.
Policymakers and economists fear a Greek default on its 340-billion-euro debt could set global markets tumbling and push other vulnerable euro zone members like Italy and Spain over the edge, potentially splitting the currency area.
The chairman of Goldman Sachs' overseas arm said on Thursday the Greek situation was a major threat to the euro, while Canada said it could trigger a global banking crisis if Europe did not get it under control.
As well as cutting pensions and extending a real estate tax rise, the cabinet put 30,000 civil servants in "labour reserve" this year, cutting their pay to 60 percent and giving them 12 months to find new work in the state sector or lose their jobs.
"WE HAVE NO HOPE"
"This is a policy we do not tolerate, we do not want. We are in continuous, total, permanent opposition to it," said Yannis Panagopoulos, president of private sector employees union GSEE, speaking on state NET TV.
With the economy expected to contract by at least 5 percent this year -- after a 4.4 percent slump in 2010 -- and unemployment at 16 percent and rising, most Greeks hold little hope austerity measures will help the nation emerge from crisis.
"We are living in terror that we may lose our jobs, our lives. Even if these lay-offs are necessary, we are not being treated like humans," said Costas Andrianopoulos, 32, who works at the National theatre.
"They cut our wages and our pensions and we took it. But I don't believe any more that any of this is for the good of the country. We'll be sacrificed for nothing. We can't avoid default, We have no hope."
The conservative opposition, which has a slim lead over Prime Minister George Papandreou's Socialists in opinion polls and has called for snap elections, maintained its refusal to cooperate with the government, which has irked EU leaders.
Opposition New Democracy party spokesman Yiannis Michelakis attacked the "tsunami of unfair and unbearable measures" and criticised Papandreou and Finance Minister Evangelos Venizelos for lacking the courage to announce the measures themselves.
"Mr. Venizelos did not dare announce them this time and of course neither did the prime minister, who has been nowhere to be seen all this time," he said.
TROIKA TO ATHENS NEXT WEEK
The country remains bitterly divided between private sector workers who say a bloated state bureaucracy is strangling Greeks and public servants who say the biggest problems are political corruption and tax evasion.
The new measures followed warnings from the "troika" of EU and IMF inspectors that Greece must stop missing the targets of its five-year bailout plan or miss the 8-billion-euro ($11 billion) aid tranche it needs to pay salaries next month.
After more than a year of Athens consistently falling behind on its commitments, the head of an EU taskforce helping Athens said on Thursday he now saw a greater willingness by Greek officials to put the reforms in place.
The troika team is expected to return to Athens early next week to complete their review.
Thousands of union members, including police officers and teachers, prepared rallies across the city centre, with many planning to march on parliament in the afternoon. Strikes are scheduled by customs and tax officials on Sept. 27 and 28.
Greece's two biggest unions -- representing some 2.5 million people -- have also announced two days of strikes in October.
(Additional reporting by Tatiana Fragou and Daphne Papadopoulou; writing by Michael Winfrey, editing by Peter Millership)