By Nikos Chrysoloras

BRUSSELS – “Recent press reports citing unnamed sources in Brussels and referring to an ultimatum by the European Commission for immediate dismissals of 25,000 Greek public sector workers are absolutely without foundation,” said Simon O’Connor, spokesman for European Commission Vice President Olli Rehn.

Asked whether Greece needs to lay off public sector workers in order to secure the next sub-tranche from the bailout mechanism, O’Connor pointed out that “the commitments as regards the public sector work force are clearly set out in the updated memorandum of understanding (MoU).”

As part of moves to reduce the public sector work force by 150,000 by 2015 compared to the 2010 level, 25,000 government employees will be put in the mobility scheme in 2013 – of which half (i.e. 12,500) will be placed in the scheme in the first half of 2013, adds O'Connor.

As the MoU makes clear: "The government’s mobility scheme, where transferred personnel can remain for up to one year with a reduced rate of pay (substituting for severance payments), while they seek new employment and are retrained, will help the transition across job positions, if necessary towards the private sector."

In this context, the Eurogroup has set the following milestone for the March disbursement of EFSF assistance (cf Table 13, page 59 in the review report published in December 2012): "Complete the staffing plans for line ministries, use them to identify redundant positions and employees, and on this basis set quarterly targets of mandatory exits through end-2014." Compliance with this requirement will be evaluated in the next review mission, which is due to get under way next week.

The European Commission also refers to page 157 of the troika report from last December. Mobility and exits, they say, as well as closure of entities and scrapping of redundant positions, will be pursued, and all affected employees will be either transferred to a mobility scheme or dismissed. Concerning those transferred to a mobility scheme, affected employees will be provided with one year of reduced pay. Brussels’s target is to place 27,000 in this scheme by end-2013.

If they fail to find a new position in the public sector, they will be required to transition to the private sector. To facilitate the renewal of the public sector work force, the troika expects a large share of those entering this program to ultimately transition to the private sector, notably via mandatory exits.

They also expect to complete staffing plans for line ministries by end-February 2013, and will use these plans to identify redundant positions and employees, and on this basis set quarterly targets for mandatory exits through end-2014 (proposed as a new structural benchmark). It is worth mentioning that page 206 of the last report also clearly states that “by end-February 2013, the staffing plans for line ministries will be completed and these will be used to identify redundant positions and employees, and on this basis set quarterly targets for mandatory exits through end-2014.”