Finance Minister Yannis Stournaras has admitted that the government may need to place several thousand civil servants in a labor reserve in order to meet its bailout targets. After meeting with President Karolos Papoulias on Tuesday, Stournaras revealed that the idea of removing civil servants from their jobs and pay some 60 percent of their salary for a year was being considered as an option to reduce wage costs in the public sector and meet its target of 11.5 billion euros in spending cuts over the next two years.
“We will look at the labor reserve because the numbers just don’t add up easily,” he told reporters.
“11.5 billion euros is a significant number and we haven’t reached it yet. We still need to fine 3.5 to 4 billion euros [of cuts],” added Stournaras, who told Papoulias there was still “hope” for Greece.
Greece has to reduce the number of civil servants it had in 2010 by 150,000 by 2015. Although numbers have come down, there is concern that targets will be missed unless the labor reserve scheme, which was abandoned last year, is revived.
“The labor reserve scheme will be re-examined as the numbers do not add up,” a senior government source, who did not rule that more people may follow in coming years, told Kathimerini on Monday.
However, the three government coalition partners have been committed to no layoffs in the public sector, even in the agencies and organizations that are to be wound up.
On Friday, the government must have finalized cuts totaling 8 billion over the next two years as part of the 11.5-billion-euro package demanded by the troika. So far the figure is around 6.5 billion, while the troika will expect to hear about the measures for the remaining 3.5 billion euros by August 20.
It appears that the government is facing serious problems in finalizing the package, despite Prime Minister Antonis Samaras’s instructions to ministers.
The Defense Ministry has planned for cuts of 2.6 billion (of which 1 billion in operating expenses), while the Health Ministry’s ambitious target of 1.5 billion in savings looks like falling below 1 billion over the next two years.
According to sources, the Labor Ministry is considering rolling back by one year the time of retirement for those that were due this year and in 2013, staggered cuts in all pensions over 700 euros, a further reduction in retirement lump sums and the abolition of Christmas and Easter bonuses.