Coalition hopes to avoid restoring armed forces wages in full

A meeting between Finance Minister Gikas Hardouvelis and representatives of the armed forces and emergency services, which was due to take place on Monday, has been called off as the government reconsiders its options on how to restore these groups’ salaries.

It emerged on Friday that the government believes that, despite a court ruling, it might not have to repay the whole amount of wages that soldiers and police officers have lost since July 2012, when the salary cuts were implemented. Sources said the coalition also believes the court verdict allows it not to restore salaries to their previous level but simply to impose cuts that are smaller than the 10 percent inflicted two years ago.

As things stand, the government will have to come up with around 650 million euros to cover the wages that need to be returned and to restore them to previous levels. However, this would be a substantial blow to the coalition’s attempts to meet this year’s fiscal targets. “The government decides fiscal policy, not the judiciary,” Hardouvelis said earlier this week, hinting at the coalition’s intention to find a way that would not involve it paying back the full amount.

The Council of State’s ruling earlier this year said that the government would have to return the wages of those serving in the armed forces or emergency services but added that salaries had been reduced by too much. The decision has been examined by the State’s Legal Council, which has advised the government that the ruling means it is not obliged to return salaries to their pre-July 2012 level.

Sources also said that the New Democracy-PASOK administration would seek to pay back any money in installments, possibly stretching them out over a period as long as five years.

Hardouvelis met on Friday with Prime Minister Antonis Samaras and Deputy Premier Evangelos Venizelos to discuss this issue but the meeting, in which several other government officials also took part, also focused on the multi-bill that the coalition is due to submit to Parliament shortly in order to complete the “prior actions” required by the troika. Once this is done Greece will qualify for another 1 billion euros in bailout loans.