Reforms bring on painful job cuts

Greece will be moving ahead with steep cuts to staff levels at state companies and local and central government in reforms aimed at boosting its competitiveness in changes that will initially send thick black clouds over the labor market. A quarterly report prepared by the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) detailed the Greek government’s action plan over the next few months, in accordance with committments it made in exchange for May’s 110-billion-euro rescue plan. Heavy on painful spending cuts in an economy that is expected to shrink by an annual pace of 4 percent this year, the plan is light on ways to kick-start the economy with short-term growth initiatives. Among the items topping the government’s list are cuts in state-sector labor levels aimed at helping slash 3 billion euros in its wage bill from 2009 to 2014. Changes to state railway organization OSE, which has debts of more than 10 billion euros, will involve staff cuts of 35 percent with another 58 percent being cut from OSE subsidiary TRAINOSE. «The restructuring plan aims to close down the group’s loss-making lines, streamline its management and downsize the staff accordingly,» the report said. Government officials have said that OSE staff will not be sacked but transferred to other state departments. However, it is unclear how this will happen, given employment positions in the state sector will be harder to come by. The government will implement a rule next year of replacing only 20 percent of retiring employees in the public sector, the report added. Changes to the heavily overstaffed public sector come at a time when jobless numbers in Greece are rising quickly, hitting the country’s young population hardest. The number of unemployed in Greece rose in June to 12 percent, from 8.5 percent in the same period a year earlier, which means that 181,784 people lost their jobs in the 12-month period. One in three people aged between 15 to 24 were out of work in May, while the jobless rate for those aged between 25-34 stands at 15.8 percent. The ECB, IMF and EU, known as the troika, estimate that Greece’s jobless figures will rise to 14.6 percent next year from an estimated 11.8 percent in 2009. The General Confederation of Greek Labor (GSEE), however, has forecast the number could rise to as high as 20 percent by the end of the year. Further government staff cuts will be implemented via a reorganization of local government aimed at reducing employees by 50 percent, to 25,000 people. «The reform aims to acheive considerable savings from the reduction in operational costs and through the realization of economies of scale in economic and human terms,» the report added. Almost one in five Greeks works as a civil servant, with the central government employing 768,000 people.