Greece will revive the labor reserve measure targeting 40,000 public servants for eventual dismissal, determined to achieve the 11.5 billion ($14.14 billion) euros in savings it promised international lenders, government officials said on Thursday.
The government’s economic team will present details of the plan, once a political taboo in Greece, to the political leaders supporting the ruling coalition as the only way to convince international lenders to keep cash-strapped Greece afloat.
“The labor reserve plan will go ahead this time,” one senior government official told Reuters on condition of anonymity. “Last time, it just didn’t happen.”
Athens pledged last year to gradually lay off 30,000 civil servants from an estimated 700,000 public sector employees as part of its bailout deal.
Under the failed plan implemented by the previous socialist government, the 30,000 civil servants were supposed to be placed in a “labor reserve”, where they would receive 40 percent of their salaries for a year before being laid off. Only 6,500 left, mainly through retirement.
Greece has repeatedly fallen behind targets agreed with its lenders, fanning anger among euro zone partners who have threatened to cut it loose from a 130 billion euro bailout deal unless they see results soon.
“This is a measure that may not produce dramatic and immediate savings but it will give credibility to all our efforts to reform,” said a second official who did not want to be named.
Cuts to ministries spending, already brought down to a minimum during two years of adjustment in the wake of the debt crisis, and merging of state entities will bring in about 4-5 billion euros in savings.
The bulk of cuts will come from another round of reduction to state salaries, pensions and benefits, as they make up two thirds of the government’s 82 billion euros of annual spending, excluding interest payments, the officials said.
The government also plans to let go of tens of thousands of temporary contract workers by streamlining its needs across ministries and state entities, the officials said.
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