EU pushes Greece to axe 200,000 jobs

The European Union has asked Greece to cut 200,000 public jobs in the next four years – not the figure of 70,000 that has been leaked to the media by official sources – European trade and industry sources told the Hürriyet Daily News on Monday.

Confirming the demand of the troika composed of the European Union, the European Central Bank and the International Monetary Fund about a gradual layoff of 200,000 public employees, an official Greek source who asked not to be named said the final decision would be taken by the government following a meeting between Greek Prime Minister George Papandreou and German Chancellor Angela Merkel in Berlin on Tuesday.

Greek Finance Minister Evangelos Venizelos spoke to IMF chief Christine Lagarde on Sept. 25 in Washington, D.C., on the ongoing economic crisis in his country. Venizelos is expected to forward IMF contact results to Papandreou prior to the latter’s critical meeting with Merkel, sources told the Daily News.

Papandreou is expected to present his package of bitter medicine to heal the Greek economy to Parliament by the end of this week; the moves are expected to include public sector layoffs.

The public sector accounts for nearly 40 percent of the Greek economy; because of its size, it is seen as one of the main reasons for the failing state of the country’s economy, together with tax evasion and corruption.

Around one-fifth of the 5 million-strong Greek labor force is employed in the public sector. Finance Ministry estimates say the number is at least 700,000, but European financial sources estimate it to be more than a million.

The EU suggests firing 200,000 of these employees by the end of 2015. The first 30,000 public employees, who are closer to the retirement age, are expected to be laid off by the end of this year. The layoffs will add up to 70,000 by the end of 2012 and increase gradually while no positions will be replaced, according to EU demands.

The measure has been imposed on the Greek government as a condition of the EU’s financial assistance. The Greek debt situation has put some EU countries whose banks lent money to Greek banks under financial pressure as well.

According to data, France owns more than 7.9 billion euros of Greek government debt; French risks emanating from the Greek economy reach upwards of 55 billion euros while Germany has nearly 8.8 billion euros in government debt and more than 33 billion euros of risk. Belgium, which is having its own economic and political problems, has lent more than 4 billion euros to Greek banks. These banks owe 2 billion euros to banks from the relatively small economy of the Republic of Cyprus.

Noting that if the Greek economy were to go bankrupt and cause a chain reaction among eurozone economies, European trade and industry sources said the responsibility lay on Papendreou’s shoulders.

“Papandreou can take the example of former Turkish Prime Minister Bülent Ecevit,” one influential source told the Daily News. “In the crisis of 2001, Ecevit burnt himself and saved his country by making the tough choice.”