ECONOMY

Government has its work cut out with pledges

The revised memorandum of understanding between Athens and its international creditors, which Kathimerini reveals, allows for one hiring for each layoff in the public sector, but only if there are no digressions from the agreed program for departures from the state mechanism.

The agreement also includes a commitment for the review of the demand for the reduction of the value-added tax in food catering, but only in case there is a better-than-expected performance in public finances.

As is already known, the deal includes the maintenance for one more year (2013) of the special property tax paid via electricity bills as well as the creation of a new property tax as of 2014 that will fetch the same amount of state revenues, as dictated by the midterm fiscal plan. The reform of the special property tax for this year constitutes a “prior action” for the next bailout tranche, so the government will have to pass legislation to that end. There is also a reference to the reduction in the tax’s rates.

There are significant changes planned for the Finance Ministry’s new General Secretariat for Revenues, as the new memorandum clearly states that it should be semi-autonomous, that inspections will intensify and political interventions in the work of the tax monitoring mechanism will stop.

Special reference is made to the creation of a program that will secure the supply of elementary medical services to 100,000 people who have not had social security coverage for a long time, securing them access to primary healthcare. The plan is for the use of money from the European Social Fund for the program to be extended to more people. There is also a provision for a series of other actions to strengthen the social fabric that has been damaged by the crisis, in the context of the government’s commitment to support vulnerable social groups.

The government further commits itself to implementing all measures agreed or replacing them with interventions which will have the same fiscal result if that is deemed necessary. It also pledges to go ahead with the full restructuring of the public sector in the context of supporting its medium-term fiscal targets and upgrading the quality of public services.

On the thorny issue of the reduction of public sector employees, the memorandum accepts the ratio of one hiring per layoff, but states clearly that “if in our opinion at any point it appears that we are not on our way to reaching the overall target [for reducing staff], the ratio will be altered.” In all other cases the rule of one hiring for every five layoffs will apply. The plan is for the issue to be discussed at the end of June so that the government can present the details of its program for hirings this year.

Besides the departure of thousands of civil servants, the government will also have to prepare a specific task plan for 275,000 public sector employees, rising to 450,000 employees by end-June. Eventually by the end of the year the organizational charts for the whole of the general government will have to be completed, along with the evaluation of all civil servants.

All this means that the government has two very busy months ahead of it to fulfill the majority of all those commitments before the next visit of the international creditors’ representatives.