Greece seeks ways to ease austerity plan

ATHENS - Agence Frence-Presse

People walk on by posters of magazine covers, featuring the leader of the conservative New Democracy party and newly elected PM Antonis Samaras (L) and the leader of the left Syriza party Alexis Tsipras, in Athens. AFP photo

Greece breached the rules of its EU-IMF loan agreement by taking on some 70,000 public sector staff in two years, undermining efforts to reduce the state payroll, a report said yesterday.

To Vima weekly said the public jobs creation in 2010 and 2011 were highest in local administration, health, the police and culture, where the number of employees actually increased.

It cited a report from a permanent mission to Athens of the so-called ‘troika’ of international creditors, the EU, IMF and the European Central Bank, and data given by outgoing finance minister George Zannias.

“While they legislated rules to reduce the number of civil servants, they were bringing people in through the window,” An unidentified troika official told the daily: The official added that over 12,000 people were hired by local councils even as a cost-cutting initiative merging municipalities was underway. Zannias’ report to the new government coalition after June 17 elections allegedly reveals that although over 53,000 civil servants retired in 2010, the overall number of state staff was almost steady at 692,000 people, To Vima said.

In this case, most of the vacancies were filled immediately, the daily said. Similarly, although another 40,000 staff left in 2011, the net reduction on the payroll was only 24,000.

By this time, Greece had promised to only hire one civil servant for every five that left.

But over 16,000 people were hired instead of the allowed 8,000, To Vima said.

The report came ahead of an expected EU-IMF audit starting today.

Structural reforms pledged in return for billions of euros in EU-IMF loans were suspended in April as the country held two elections in six weeks, with the first on May 6 failing to produce a workable government.

Meanwhile, the new Greek government said or June 23 it wanted to review several austerity measures enacted for rescue loans and bargain for a two-year fiscal adjustment extension as it prepared for an EU-IMF audit.

New government to ‘revise’ austerity plan

A policy document released by the conservative-led coalition said efforts to “revise” Greece’s EU-IMF bailout deal in talks with creditors starting today include “the extension of the fiscal adjustment by at least two years” to 2016.

The aim would be to meet fiscal goals “without further cuts to salaries, pensions and public investment” and new taxes, it said, announcing a freeze on further civil-service layoffs, sales-tax cuts and longer unemployment benefits.

“The aim is to avoid layoffs of permanent staff, but to economize a serious amount through non-salary operational costs and less bureaucracy,” the three-party coalition document said.

The new government said it also wanted to review minimum-wage cuts and measures taken earlier this year to facilitate private-sector layoffs, arguing that collective labor agreements would “return to the level defined by European social law” and what Europeans have agreed on.

It said employers and unions should be allowed to set the private-sector minimum wage, which was cut by 22 percent to 586 euros ($736) in February amid additional austerity measures taken to clinch a new rescue deal.

The blueprint is designed to reduce anger in Greece towards the austerity policies of the EU-IMF loan agreement, which are deemed to have deepened a recession now continuing for a fifth year.

Over a quarter of Greece’s workforce -- 1.12 million -- are jobless according to official figures.

But Greece remains under intense international pressure to implement the terms of the EU-IMF bailout package that has kept the indebted country’s economy afloat for two years.

The eurozone’s outgoing leader Jean-Claude Juncker last week said the creditors would simply be looking to “update” accords struck against 130 billion euros of loans -- plus a 107-billion-euro write-down of privately held debt.