Greek cabinet to finalise labour reserve scheme

ATHENS, Oct 2, 2011 (AFP) - Greek Prime Minister George Papandreou chairs on Sunday afternoon an emergency cabinet meeting to finalise details of a "labour reserve" scheme aimed at shrinking the public sector as demanded by Greece's international creditors.

AFP - Prime Minister George Papandreou speaks during a press conference with the Emir of Qatar Sheikh Hamad Bin Khalifa Al Thani (unseen) at the Prime Ministers official residence, in Athens on October 1, 2011.

Following numerous consultations over the weekend with top officials from the EU, the International Monetary Fund and the European Central Bank, the government seems to have locked on a scheme to place 30,000 civil servants temporarily in a "labour reserve" in order to meet fiscal requirements set out by the creditors for 2011 and 2012.

Finance Minister Evangelos Venizelos said the scheme had been devised with "transparent and objective" criteria.

"It creates the lowest possible social cost and places on a 'reserve' those who in comparison can more likely cope with the difficulties of this new situation," he told with the Sunday edition of newspaper "To Vima".

Venizelos said that various proposals had been discussed with the 'troika' -- the EU, ECB and IMF -- including one submitted by the main opposition party, New Democracy.

In a separate article in "to Vima", ND leader Antonis Samaras asserted that his party's plan was more efficient than the government's.

"With our proposal the deficit will be reduced by 850 million (euros) the first year and four billion the fifth. According to the government's proposal the deficit will decrease by 614 million the first year and three billion the fifth," he said.

"With our proposal the person on 'reserve' will receive the basic salary and won't be fired. The government's proposal gives the person on 'reserve' 60 percent of the basic salary and then dismisses them," he added.

The auditors are pressing for a reduction of the public sector, but the government faces a major obstacle as the Greek constitution protects civil servants from dismissal.

One possibility is scrapping various state organisations and placing their employees in the labour reserve to avoid constitutional revision.

Civil servants close to retirement would also be placed in the reserve on a reduced wage, something the auditors had initially rejected but now seem to have accepted, according to local media.

People in the reserve will receive a much lower salary for one year before their status is reviewed.

The final details will be rubber-stamped at the cabinet meeting scheduled to begin at 1500 GMT where the draft 2012 state budget will also be on the agenda.

The EU-IMF auditors returned to Athens on Thursday, four weeks after they abruptly left, having noticed new spending discrepancies by the Greek government and disappointed at the lack of progress in implementing promised structural reform measures.

The 'troika' will extend their audit until Friday, according to Kathimerini daily.

The debt-hit nation must persuade the audit mission that its reform plans are credible to merit a vital tranche of eight billion euros ($10.8 billion) from the 110-billion-euro loan agreed with the EU and the IMF in May 2010.

Eurozone finance ministers meet in Luxembourg on Monday to seek an agreement on unlocking the vital loan aid.

Other news