Athens – After marathon talks with foreign auditors, the Greek government said Sunday that it had reached a deal on how to slash its unwieldy public sector by putting 30,000 workers on a scheme that would lead to early retirement for some and dismissal for others, in a bid to meet conditions set by foreign lenders for the release of crucial emergency loans.
The government also completed a draft budget for 2012, which is expected to be presented in Parliament on Monday and voted on by the end of October, and conceded that it would miss a deficit-reduction target of 7.6 percent of gross domestic product. The deficit is projected to equal 8.5 percent of G.D.P. this year. The deficit shortfall had been expected because of delays in carrying out reforms and a deeper-than-expected recession, with the Greek economy forecast to contract by 5.5 percent this year.
In comments made late on Sunday after a cabinet meeting, a government spokesman, Ilias Mossialos, said Sunday’s deal was the result of “long and difficult negotiations” with foreign auditors and that it constituted the “gentlest possible scenario in terms of social repercussions.”
According to the text of the draft law distributed to the local news media, 30,000 civil servants — or 3 percent of the public work force — would be put on reduced salary by the end of the year. The majority, some 23,000, are at least 60 years old and essentially would be forced into early retirement. The remainder would lose their positions through the merging and abolition of dozens of government agencies. Mr. Mossialos said the plan would save the government some 300 million euros, or $400 million, from the public sector wage bill in 2012.
The Greek government is in a race against time to convince representatives of the European Commission, the European Central Bank and the International Monetary Fund, known as the troika, that it will make good on pledges to put its financial house in order. Without the release of about $11 billion in aid — part of a 110-billion-euro bailout agreement reached last year — Greece could run out of money this month and face a default that would shake the euro zone and global markets.
The decision on whether to release the cash is expected to be made on Oct. 13 at an extraordinary meeting of European finance ministers, but it will depend on the troika officials, currently in Athens, issuing a positive report about Greece’s efforts at fiscal overhaul. A chief source of frustration for foreign auditors has been the delays in carrying out reforms and an apparent reluctance by the government to reduce the country’s public payroll.
There is vehement public opposition to the new reforms, which come after a wave of tax increases and cuts to public sector wages and pensions over the past year. In total, the new measures expect to save nearly $9 billion this year and in 2012.
Civil servants, who have called 24-hour general strikes for Wednesday and Oct. 19, last week blocked several government ministries to prevent the troika officials from collecting data. A sit-in on Friday at the national statistics office, Elstat, prevented the authority from finalizing debt and deficit data for 2010.
There are also rifts within the ranks of the governing Socialist Party. The divisions pose a threat to the administration of Prime Minister George A. Papandreou, which is governing with a fragile majority of four in Greece’s 300-seat Parliament. The government managed to pass a new property tax in Parliament last week, indicating that Mr. Papandreou was still able to rally wavering lawmakers. But the civil servants’ bill might be tougher to pass as it strikes at the heart of the government itself.
Opening Sunday’s cabinet session, Mr. Papandreou indicated that the priority should be guaranteeing Greece’s solvency and position in the euro zone.
“Important decisions, which need to be taken on a European level, depend first and foremost on us,” Mr. Papandreou said. “We need to show we are dedicated to achieving our goals.”
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