One of the dramas of the Greek financial crisis concerns public servants salaries and benefits. As the economy was not developing as fast as the Government's liabilities, reward for public servants started being financed... through public debt. That meant Greece was raising money at foreign markets to actually pay its liabilities with the persons that worked directly for it. As the situation was not solved at an initial stage (as it would be unpopular), Greece's debt continue climbing and it reached a stage in which creditors confidence in Greece's ability to pay back started eroding. This erosion rate is climbing steapilly, as investors see their ability to have their return declining.
So, this means... that investors started "closing the tap" (cutting their money supply) to Greece. When this happens, public servants will not be able to be rewarded for their work - because that money for their reward was coming out of public debt. The only way they will get paid is... to reduce Greece spending (whilst accelerating growth, if possible), meaning significant salary cuts.
Let's have no doubt about it - it is a huge drama! It is an incredible terrible situation! Hence the violent demonstrations. But, personally, I don't see any other way - Greece will have to undergo a terrible cut in their public payroll, other operational expenditures and investment. And don't doubt - no one would like to be in that situation.
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