Labor reserve on the cards again

The placement of 15,000 public sector employees on a labor reserve scheme is returning to government considerations, as the projected rate of retirements in the years ahead fails to ensure that the total number will be reduced by 150,000 by 2015.

This means that about 15,000 public servants will be placed on labor reserve status with pay equal to 60 percent of their basic salary.

?The labor reserve scheme will be re-examined as the numbers do not add up,? said a senior government source, who did not rule that more people may follow in coming years. However, the three government coalition partners have been committed to no layoffs in the public sector, even in the agencies and organizations that are to be wound up.

The issue, along with proposed pension cuts of about 5 billion euros in 2013 and 2014, is likely to be discussed by the partners within the week. On Friday, the government must have finalized cuts totaling 8 billion over the next two years as part of the 11.5-billion-euro package demanded by the troika. So far the figure is around 6.5 billion, while the troika will expect to hear about the measures for the remaining 3.5 billion euros by August 20.

It appears that the government is facing serious problems in finalizing the package, despite Prime Minister Antonis Samaras?s instructions to ministers. The Defense Ministry has planned for cuts of 2.6 billion (of which 1 billion in operating expenses), while the Health Ministry?s ambitious target of 1.5 billion in savings looks like falling below 1 billion over the next two years.

According to sources, the Labor Ministry is considering rolling back by one year the time of retirement for those that were due this year and in 2013, staggered cuts in all pensions over 700 euros, a further reduction in retirement lump sums and the abolition of Christmas and Easter bonuses.