Greece caves in on civil service layoffs
The Associated Press
Greece's coalition government on Monday caved in to demands to cut 15,000 civil service jobs this year, amid mounting international pressure to agree on austerity measures.
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CBC
Greece's coalition government on Monday caved in to demands to cut civil service jobs, announcing 15,000 positions would go this year, amid mounting international pressure to agree on austerity measures needed to secure major new debt agreements.

The announcement signals a major shift in Greece's policy, as state jobs have so far been protected during the country's acute financial crisis, which started about two years ago. Public Sector Reform Minister Dimitris Reppas said the job cuts would be carried out under a new law that allows such firings.

Greece is racing to push through painful reforms and clinch a 130 billion euro ($170 billion US) bailout deal from its European partners and the International Monetary Fund to avoid a March default on its bond payments.

Debt-ridden Greece has been kept solvent since May 2010 by payments from a 110 billion euro international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.

Its implementation depends on the austerity measures but also on separate talks with banks and other private bondholders to forgive 100 billion euros in Greek debt, in exchange for a cash payment and new bonds worth 50 per cent less than the original face value, longer repayment terms and a cut in the interest rate to be paid on the bonds. Those close to the negotiations expect private investors to take an overall cut of up to 70 per cent on the value of their bonds.

But delays in negotiations with rescue creditors pushed a crucial meeting of coalition party leaders back by one day to Tuesday.

The prime minister's office said the delay is to allow completion of separate negotiations late Monday between Prime Minister Lucas Papademos and representatives of Greece's bailout creditors, who will first meet with Finance Minister Evangelos Venizelos.

Leaders of the three parties in Papademos' coalition publicly oppose steep cuts in private sector pay demanded by the eurozone and International Monetary Fund, which have angered Greek unions who called a general strike for Tuesday.

"We are opposed to indiscriminate firings," Reppas said. "The work force reduction is strictly connected with the restructuring of services and organizations at each ministry."

Officials at the Public Sector Reform Minister gave no details of the new plan, or say how many of the job cuts would be compulsory.

Greece has promised to reduce its 750,000-strong broader public sector by 150,000 by the end of 2015, but has so far insisted it could reach that target through staff attrition.

Greeks have already been subjected to a spate of austerity measures in return for the rescue loans, suffering significant cuts in pensions and salaries coupled with repeated tax hikes and an increase in retirement ages.

Calling for a strike

Angry at the prospect of fresh pain after two years of harsh austerity, the main GSEE labour union and the ADEDY civil servants' union called a 24-hour general strike — the first of the year — for Tuesday accompanied by a protest march in Athens. The walkout was expected to affect most public services and banks, although it was unclear whether flights would be disrupted.

Previous anti-austerity demonstrations have been marred by violence; in May 2010, three people died in an Athens bank torched by rioters.

An ADEDY statement said the proposed new cutbacks would "intensify the vicious cycle of recession and drive Greek society to despair."

Greece is in its fifth year of recession, while unemployment has hit record highs of about 19 per cent.

"The current policy of austerity ... is turning workers into pariahs, jobless people and pensioners into paupers and deprives our youth of any hope," the statement said. "This policy has already pushed Greeks beyond their limits and must be stopped at any cost."

GSEE leader Yiannis Panagopoulos said the creditors' demands were a "chronicle of a death foretold."

"What is going on is not a negotiation," he said. "It's blunt, cynical blackmail targeting an entire people."