Talks on cuts stall on labor reserve issue

Prime Minister Antonis Samaras and other government officials sought to appear upbeat on Wednesday on the progress of talks aimed at identifying 11.5 billion euros in budget cuts for 2013 and 2014 but differences between leaders of the fragile coalition government over the planned introduction of a labor reserve scheme to cut costs in the public sector appeared to be slowing the process down. Meanwhile, European Union officials indicated that a review of Greece’s economic reform progress by the country’s international creditors -- the European Commission, European Central Bank and International Monetary Fund, known as the troika -- would be issued in October, not in September as originally expected. Shortly after the report by Dow Jones regarding the troika’s review, Alternate Finance Minister Christos Staikouras told Skai that the package of 11.5 billion euros in measures must be finalized by September 14 when eurozone finance ministers are due to convene in Nicosia for a Eurogroup summit.

Samaras, who on Wednesday met with Finance Minister Yannis Stournaras, told reporters that efforts were being made to make “the most effective cuts to the deficit with the least possible pain for citizens.” “We are looking everywhere,” Samaras said. He added that the government “will not return to measures that have failed in the past.” When asked by a reporter whether the government would resurrect the labor reserve scheme -- a failed plan to put thousands of civil servants on heavily-docked wages ahead of a review -- the premier dodged the question, stating that authorities were looking at an “overview of alternatives.”

However, Samaras’s coalition partners -- socialist PASOK leader Evangelos Venizelos and Fotis Kouvelis of Democratic Left -- are not keen on reviving the labor reserve scheme. Kouvelis is particularly opposed to the measure, which authorities have attempted to implement several times without success, dismissing it as “a fiasco.” Venizelos is also skeptical amid fears that such an initiative could lead to layoffs in the civil service, which he has categorically opposed.

Sources close to the former finance minister blamed Stournaras, claiming that inadequate planning led the new minister to fall back on the labor reserve option. Kouvelis is also said to be frustrated over a lack of communication between coalition party leaders and Stournaras.

Despite the objections, however, sources in both camps said the parties would not do anything to undermine the cohesion of the coalition.

The main leftist opposition party SYRIZA was quick to draw attention to the upheaval. It added that resorting to the labor reserve scheme confirmed that “the memorandum doesn’t work,” a reference to Greece’s second loan deal with creditors.


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