Greece cuts jobs in austerity drive
Greece’s coalition government 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.
The announcement yesterday signals a shift in Greece’s policy, as state 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 yesterday to join protest rallies organised 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 €130bn 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 €110bn 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 €100bn 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 €30bn 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, due to the ongoing negotiations with EU-IMF debt inspectors who were locked in talks with the government yesterday.
