Even tighter policy on the cards

The government’s updated stability program for the next three years will require a very tight policy on salaries. The real increases in salaries and pensions in both the public and private sectors will have to fall to within the range of inflation. The program submitted to the European Commission for consideration provides for real rises to drop from 7.6 percent in 2008 and 6.1 percent in 2009 to just 3.4 percent in 2010 and 3.5 percent in 2011. «Income policy will cover inflation without risking the viability of public finances or leading to a loss in competitiveness,» the government has argued in the documents sent to Brussels. It adds that «the government will use targeted policies to strengthen the social groups that are more vulnerable.» The income policy, to be discussed in Brussels on February 18, is based on two foundations: The first provides for cutting spending and for slight rises to civil servants, while the second allows for targeted and substantial handouts. Apart from the allowance for heating oil, the government has left several tax issues open without making any decisions for the time being. Sources suggest that the Inner Cabinet monitoring the economy will decide at its next meeting to reinstate the 10,500-euro annual revenue threshold for the 800,000 self-employed, below which they will not be taxed. The government is also examining a change in the way the Single Property Tax is calculated. Deputy Economy Minister Nikos Legas is further examining a plan that provides for cutting operating costs by over 15 percent. Cuts will include employee transfers, overtime and reducing funds to the civil servant healthcare organization (OPAD). The plan entails cuts of up to 1.2 billion euros. Expenses will also be cut through fewer hirings in the public sector, merging state corporations within four months and having all payments to civil servants made by just one agency, to ensure a clearer picture of the salary each public sector worker receives.

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