Cuts to pensions, salaries, civil service jobs agreed ahead of Samaras talks

Finance Ministry officials are to hold a new meeting on Monday in a bid to finalize proposals for 11.5 billion euros in spending cuts ahead of Prime Minister Antonis Samaras’s meetings with European leaders this week.

Samaras is due to meet Eurogroup chief and Luxembourg Prime Minister Jean-Claude Juncker in Athens on Wednesday. He is due to travel to Berlin for talks with German Chancellor Angela Merkel on Friday and to Paris for a meeting with French President Francois Hollande on Saturday.

Merkel and Hollande are due to meet in Berlin on Thursday.

Samaras hopes to have the package of 11.5 billion euros in measures demanded by the troika ready to present to his counterparts and the indications are that the proposals for the savings will be in place.

Following a meeting at the ministry late on Friday, it was revealed that 10.8 billion euros’ worth of measures had been agreed by officials and that the remaining 700 million woul be identified at Monday’s meeting. The measures, however, still need the approval of the three coalition leaders before they are put to Parliament.

The bulk of the cuts, some 4 billion euros, will come from pensions and welfare benefits. In terms of the social payments, some will be reduced and others scrapped altogether and the government will introduce stricter income and assets criteria for those who will be eligible for benefits in the future.

In terms of reduction to pensions, the government has yet to decide on which of two sliding scales will be used to calculate the cuts, which will range from 2 to 15 percent. In either case, retirement pay below 700 euros per month will not be affected. Supplementary pensions, however, are to be slashed by up to 35 percent.

This would be the fourth cut to pensions since 2010, when Greece signed up to the EU-IMF bailout. Pensions have been reduced by up to 40 percent since then.

Hefty cuts to salaries at public enterprises, or DEKOs as they are known, are also being lined up. Sources said that the reduction is likely to reach between 30 and 35 percent. The average annual salary at DEKOs is currently 31,000 euros but will be reduced to about 21,000, which will save the public coffers 250 million euros.

Sources said that regular civil servants would also face further cuts to their salaries. Over the last two years, they have seen their two extra monthly payments for Easter, summer and Christmas whittled down, but according to the latest plans, these will be phased out completely. The Finance Ministry has not ruled out cuts to basic salaries in the public sector as well.

The government is also set to announce the gradual removal of 34,000 civil servants who will be placed in a labor reserve scheme, where they will receive a percentage of their salary for the next 12 or 24 months and will no longer be employed in the public sector.


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