Greece vows immediate job cuts

Story highlights

  • "Public sector reform is going to happen right now," Greek finance minister says
  • Athens is already lagging behind on this year's fiscal targets
  • The government had pledged to cut 150,000 public sector jobs by 2014
  • Finance ministry adopted delaying tactics aimed at postponing the cuts
Greece's finance minister has said he will implement job cuts immediately in the country's bloated public sector after international lenders turned up the heat on the socialist government.
Evangelos Venizelos told parliament on Tuesday night: "The message is that we're raising the flag of structural change ... Public sector reform is going to happen right now.
"The country has to gain momentum and a sense of purpose in order to become competitive, to have a future."
Mr Venizelos's policy switch followed warnings by Greece's international lenders that foot-dragging on structural reform would no longer be tolerated. Athens is already lagging behind on this year's fiscal targets and pressure is mounting on eurozone nations to address its debt crisis.
The government pledged to cut 150,000 public sector jobs, almost 20 per cent of the total, by 2014 under the terms of a second international bail-out agreed in July.
But the finance ministry adopted delaying tactics aimed at postponing the cuts until late next year.
Wolfgang Schäuble, German finance minister, said on Monday that Athens would not receive a €8bn loan tranche due this month unless the "troika" -- experts from the European Union, International Monetary Fund and European Central Bank -- turn in a positive progress report.
George Zannias, a senior finance ministry official, received a similar message at a meeting in Brussels of eurozone officials, according to Greek media reports.
The troika has given the finance ministry a final opportunity to put in place a series of reforms that have been delayed because of strong political opposition. Its inspectors are due back in Athens on September 14 to assess progress before reporting back to Brussels and Washington. A decision on releasing the loan tranche is expected at the end of this month.
Mr Venizelos said that a unified payment system for civil servants would be launched this month, 13 months later than had been agreed under Greece's first EU-IMF bail-out but in time for significant spending reductions to be recorded in fourth-quarter budget figures.
The scheme would streamline pay grades at different ministries and slash allowances across the board. It has been strongly opposed by finance ministry employees, including the powerful tax officials' union.
Greek officials are scrambling to meet a September 14 deadline for shutting down more than 150 state organisations, and transferring workers made redundant to a "strategic reserve" on 60 per cent of their previous salary.
The pay cuts, closures and transfers are unprecedented for Greece, where public sector workers have enjoyed full job security for decades, and are expected to trigger strong reaction from public sector unions.
"The government pledged that public sector employees would be transferred to other jobs, not made redundant ... but this reserve is just a waiting room for people to be fired," said an official at Adedy, the civil service union.