WITH GREEK government approval last night of the effective dismissal of thousands of civil servants by Christmas, Greece’s socialist Pasok government now faces the more difficult task of implementation in a deteriorating economic climate.
Under the so-called labor reserve plan, which George Papandreou’s cabinet passed last night, 30,000 public sector workers will be suspended from their duties on 60 per cent pay by the end of December. If, after a year, they fail to find another civil service position, they will be dismissed.
The cabinet also approved a draft budget for 2012 that will see additional cuts and tax-raising measures worth €6.6 billion.
After the meeting, the finance ministry confirmed that Greece will miss its 2011 and 2012 budget deficit targets set by the EU and the International Monetary Fund, with the deficit for this year expected to reach 8.5 per cent of gross domestic product, above the target of 7.8 per cent.
Visiting troika inspectors, who arrived back in Athens last week to assess whether the struggling country should be given its next, sixth bailout installment worth €8 billion, had insisted that the government agree to the redundancy plan and the draft 2012 budget.
The redundancy deal was hammered out after hours of negotiations on Saturday between troika officials and key government officials, which included the finance minister, Evangelos Venzielos.
In a newspaper interview published yesterday, Mr Venizelos claimed that payment of the sixth installment was now guaranteed.
“Since we take such difficult decisions and the Greek people make such great sacrifices, yes, the sixth installment is assured,” Mr Venizelos told To Vima, ahead of the cabinet meeting, adding he was prepared to do what it takes to save the country from default.
The government spokesman last night said that among the first batch of public servants – from ministries, local authorities and semi-state bodies – to be placed on the reserve would be 20,000 employees aged over 60 and within two years of receiving a full pension and a further 7,000 officials to come from the abolition or merger of about 150 state agencies.
With the troika calling for a radical downsizing of the public sector by 2015, the government spokesman added that more civil servants will be placed on the reserve in 2012 and 2013.
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State workers are one-fifth of the Greek workforce and are guaranteed jobs for life under a constitution that bans firing government employees in virtually all circumstances. The government has said it will remove all legal obstacles to the labor reserve measure.
However, given an existing rule that allows the hiring of only one civil servant for every 10 retirements, those placed on the labor reserve will find it difficult to find a replacement position in the public service.
Understandably, resistance to the measure is intense from within the civil service. In September, the government ordered managers at 150 state agencies to turn in lists identifying which 10 per cent of employees should be placed on reserve.
Dozens of managers refused to comply with the directive, arguing that they had no personnel to spare or that they refused to shoulder the legal consequences of the labor reserve should it be declared illegal by the courts.
And with the economy in its third year of recession – it is contracting at a rate of 5.5 per cent, a trend set to continue into 2012 – and the second-highest unemployment rate in the EU, Greece’s trade unions argue that the labor reserve measure will lengthen the dole queues.
The country’s unions have called a general strike for Wednesday, the first since June. With taxpayers fuming over a host of recent tax hikes and levies, thousands are expected to join the massive street protest to voice their frustration at austerity.
Taxpayers are up in arms about a once-off solidarity tax, which, for example, costs a couple with two children earning €40,000 a year about €650, and a deeply unpopular blanket property tax, which will be collected via electricity bills. The government has said that those who fail to pay – pensioners and the recently unemployed will also be billed – will have their power cut off.
Leftist parties have urged citizens not to pay the new taxes, to the point of organising the burning of tax demand forms on public squares. It is a message enthusiastically received in a country with up to one-quarter of households already struggling to pay monthly utility bills.
But a former prime minister yesterday said that Greece was on the “borderline” and has little choice but to solider on with austerity, citing the “disastrous” consequences that any return to the drachma would involve.
In an article in yesterday’s Kathimerini , Costas Simitis, who as Pasok leader negotiated Greece’s entry into the euro, wrote that “Greece’s membership of the euro zone would be decided by 2014 at the latest . . . We must avoid an exit from the euro zone at all costs.” Mr Simitis said a return to the old currency would slash people’s savings.