ECONOMY

More pension cuts in the pipeline

The government appeared set to announce on Tuesday further cuts to all pensions as part of the effort to finalize an 11.5-billion-euro package of savings over the next two years, as demanded by the country?s international creditors — known as the troika.

?There are no easy solutions. Our efforts are focused on avoiding any cuts for the lowest-paid pensioners but, unfortunately, this is the most populous segment. Spending on pensions has been severely restricted but it must be restricted even further,? Labor Minister Yiannis Vroutsis told a radio station.

Vroutsis is expected to submit to the three government coalition partners by Monday the alternative scenarios for saving more than 5 billion euros in spending on pensions. According to sources, the pension cuts will be staggered, from 2-3 percent for the lowest to 15 percent for the highest. There will also be cuts in supplementary pensions, retirement lump sums and welfare benefits.

A top-level source argued on Tuesday that if the leaders of the three coalition partners — New Democracy, PASOK and Democratic Left — do not abandon their previously stated ?red lines? for no further pay cuts, the 11.5 billion euros? worth of cuts will not be finalized.

A previously mulled idea of raising the retirement age, meanwhile, seems to be losing favor because it would hamper efforts to reduce the overall number of civil servants.

The government is also considering placing some 45,000 public sector workers in a labor reserve scheme over the next three years and will not renew 25,000 short-term contracts, as part of efforts to reduce the total number by 150,000 by 2015.

?We shall have to look into the labor reserve scheme because the numbers do not easily add up. The sum of 11.5 billion is a high figure. We are not there yet; we are still around 3.5-4 billion euros off target,? Finance Minister Yiannis Stournaras told reporters after a meeting with President Karolos Papoulias on Tuesday.

Deputy Finance Minister Christos Staikouras said in a radio interview on Tuesday that the troika is currently assessing the government?s labor reserve proposal. He said the previous scheme did not work last year because it was not properly implemented.

Ministers are also considering abolishing what little is left of Christmas and holiday bonuses.