Talks on cuts stalling over labor reserve issue

Government officials were on Wednesday to continue talks aimed at identifying 11.5 billion euros in budget cuts for 2013 and 2014 but the proposed resurrection of a so-called labor reserve scheme aimed at putting thousands of civil service on reduced wages ahead of a status review appeared to pose a serious stumbling block to progress.

The leader of the third party in the coalition government, Fotis Kouvelis of Democratic Left, appeared to be particularly opposed to the measure which authorities have attempted to implement several times without success. «The measure was a fiasco, I will not support a fiasco,» Kouvelis told reporters. The head of socialist PASOK, Evangelos Venizelos, was also skeptical about the measures but less vehemently so. He has insisted that it should not lead toward layoffs in the civil service.

Government spokesman Simos Kedikoglou, for his part, told Skai television channel on Wednesday that «all possibilities are up for discussion» as regards the issue of the labor reserve scheme. Once the party leaders have agreed on this and other measures, they will make their proposal to representatives of the country's foreign creditors, he said.

According to Mega TV channel, Kouvelis has expressed frustration at the lack of communication between coalition party leaders and Finance Minister Yannis Stournaras who is spearheading the effort to identify 11.5 billion euros in savings for 2013 and 2014. Kouvelis said he did not want to hear about Stournaras' decisions from the latter's statements to reporters on TV news bulletins.

Apart from the implementation of the labor reserve scheme, officials are considering scaled cuts to pensions and cutbacks to state funding in the health and justice sectors along with the merging and abolition of underperforming or defunct state organizations.