The European Commission sounded on Wednesday the alarm over public sector hirings in Greece, in an otherwise positive report on the 12th enhanced surveillance assessment. Brussels recommends the disbursement of 767 million euros to Athens, but also calls on the government to be moderate in its fiscal policy, bearing in mind its high public debt.
“It is important to maintain a wise fiscal policy so as to safeguard the midterm sustainability of public finances,” noted the Commission, addressing not only Greece but also other member-states running high national debts, in its statements on draft budgets that were also released on Wednesday in the context of the European Semester.
The enhanced surveillance report shows that the number of civil servants has risen by 2.6% since 2018, when Greece exited the bailout mechanism, mainly due to the increase in the number of temporary staff by 24.5%. As a result salary expenditure is expected to post a 5% increase between 2018 and 2022, and climb to 9.5% of gross domestic product next year from 9.3% in 2018.
The Commission calls on the government to follow the matter closely and strengthen central monitoring in hiring procedures. It also welcomes the government’s decision to set a ceiling on the hiring of temporary staff for next year, and stresses the significance of keeping the total costs of civil administration stable in order to extend a sensible fiscal policy into the medium term.
The report further mentions that Greece is entering the final year of its enhanced surveillance as its pledges cover the period up to mid-2022. However, Brussels stops short of defining when exactly the surveillance will end, saying that decisions on the disbursement of the other tranches toward the lightening of Greece’s debt load and the end of the enhanced surveillance “will have to take into account the progress in the fulfillment of commitments and the broader economic policy environment.”
There are two tranches that are still outstanding after that just approved.