Public sector employees are set to receive an average 4.2 percent nominal wage increase and pensioners a 4.5 percent hike in benefits this year, the Finance Ministry said yesterday. The wage and pension increase will cost the government 602 million euros this year, said Finance Minister Nikos Christodoulakis, presenting the government’s incomes policy for 2003. «The wage bill for this year is 448 million euros and for pensions it is 154 million euros,» he said. The nominal wage increase ranges from 2.48 percent to 5.15 percent before withholding taxes, depending on employees’ years in the service and category of employment. After deducting taxes, wages are set to rise by 3.18 percent to 6.58 percent. Under a two-year collective wage agreement signed last year, the private sector is to receive a 3.9 percent nominal wage increase this year, with no inflation clause, unlike the previous year. The government was able to afford the wage and pension rise after reducing public debt by two percentage points last year and lifting value-added tax revenues by a higher-than-expected 11 percent, said Christodoulakis. «The incomes policy for 2003, together with the tax policy, will reduce the burden on wage-earners, pensioners and families with children,» he said. He said low- and middle-income groups will benefit the most following last year’s tax reforms, which include a hike in the tax-exempt threshold and which come into effect this year. He said the latest hike will also bring public sector wages closer to the EU average. Wage negotiation talks with public sector employees union ADEDY on next year’s pay increase is set to kick off shortly.