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Greece agrees to cut 15,000 civil service jobs

07 February 2012 11:22 (UTC +04:00)

Baku - APA-Economics. Greece’s coalition government on Monday caved in to demands to cut civil service jobs, announcing 15,000 positions would go this year, amid mounting international pressure to agree on austerity measures needed to secure major new debt agreements, Associated Press reported.

The announcement signals a shift in Greece’s policy, as government jobs have so far been protected during the country’s acute financial crisis, which started about two years ago.

Public Sector Reform Minister Dimitris Reppas said the job cuts would be carried out under a new law that allows such firings.

Unions have called a 24-hour general strike for today, in response to the new austerity measures, while about 4,000 protesters braved torrential rain late Monday to join protest rallies organized in central Athens by left-wing opposition parties.

Greece is racing to push through the painful reforms -- which have yet to be agreed to by Greece’s coalition partners -- to clinch a 130-billion euro ($170 billion) bailout deal from its European partners and the International Monetary Fund and avoid a March default on its bond repayments.

Debt-ridden Greece has been kept solvent since May 2010 by payments from a 110-billion euro ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.

As well as the austerity measures, the bailout also depends on separate talks with banks and other private bondholders to forgive 100 billion euros ($131.6 billion) in Greek debt.

The private investors have been locked in negotiations over swapping their current debt for a cash payment and new bonds worth 50% less than the original face value, longer repayment terms and a cut in the interest rate to be paid on the bonds.

Greek government officials say they expect private investors to take an overall cut of up to 70% on the value of their bonds.

However, the EU/IMF bailout has to be secured for the deal with private investors to go ahead as about 30 billion euros from the bailout will be used as the cash payment in the bond-swap deal.

Greece’s coalition party leaders pushed back a key meeting on the austerity measures by a day until today because of the negotiations with EU-IMF debt inspectors.

The leaders have already agreed to cut 2012 spending by 1.5% of gross domestic product -- about 3.3 billion euros ($4.3 billion) -- improve competitiveness by slashing wages and non-wage costs, and recapitalize banks without nationalizing them.