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Black 2011 for civil servants in Greece

18 November 2010 / 14:11:34  GRReporter
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It appears that 2011 will be black for civil servants in Greece. It became clear after revising the initial draft budget for the next year that the time has come for cut offs in the public sector. The Ministry of Finance presented in mid-October the financial plan for 2011 which was composed of 72% revenue from fees, taxes, fines etc. and 28% cuts in public sector spending. But much water ran under the bridge since then.

First, there came the list of financially inefficient state enterprises that drag the country with tens of billions of euros annually in total. Meanwhile, the market recession played a practical joke on the George Papandreou’s government and tax revenue were found to be at least two billion less than planned for the first 10 months of the year. On top of that, the European Statistical Office decided to finally unravel the issue with the data of the Greek economy, known as ‘Greek statistics’ (to write what Europe wants to see, not what actually happens). There was another surprise that Greece's budget deficit for 2009 is neither 9.3% of GDP, nor 13.7% of GDP but whole 15.4% of GDP. The external debt of the country grew from 115% of GDP to 127% of GDP. This was quite upsetting for the government plans to reduce the deficit and taking additional measures for fiscal consolidation became a necessity.

All these facts placed the socialist PASOK government in very difficult situation as it swore just a year ago that Greece has the money. The new draft of the budget provides for 50% of revenues and 50% of cost cutting and the first affected will be the unprofitable public enterprises. It is quite natural jobs in these enterprises to be cut, the wages of which cost quite a lot for ordinary taxpayers among other things. According to media reports, which refer to Greek economists, the average wage in the State Railways (OSE) is about six thousand euros and the company itself is not profitable and this costs one billion a year to the Greeks. For comparison, the minimum wage in the private sector is 740 euros and the average salary is about 1300 euros. Not only the state railway monopoly is not profitable but even records deficit. The Greek railway company has accumulated 10 billion euros debt in the last 10 years. Urban transport companies, ports and some other government organizations are in the same situation.

The cure for these wounds of the Greek public administration is privatization, optimization or closure. Staff reductions in these organizations are expected and even required. The opinion of the Minister of Transport and Infrastructure Dimitris Repas, however, is different. Notwithstanding the recommendations of the supervisory Troika of the International Monetary background, the European Central Bank and the European Commission, he said last week that there won’t be staff cuts in sectors managed by him. Greek government’s unclear signals confuse international observers and foreign markets largely and the only impression is that there is no common will for change in Greece.

According to latest information, the Troika has asked the government of George Papandreou to cut civil servants by about 30%. The number of permanent employees is approximately 800,000 and about another 300,000 are employed temporarily. The government plans to appoint one person in five retirees in the next three years. The issue of permanent appointed  is more delicate, because in Greece a belief is rooted that if you are appointed a civil servant you won’t have to work hard any longer.

Anyway, temporary workers or civil contracts will be cut first, which will not have alternates. It is known for now that new and drastic reduction in wage supplements are expected to affect around 26 thousand employees in transport, which will have to say goodbye to about 40% of additional income calculated on basic salary. According to informed sources, this is the price that transport workers need to pay to retain their jobs.

All details about the 2011 budget are expected later in the day.

Tags: EconomyMarkets2011 budget
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