Greek public sector no longer too large, says government before budget vote

Derek Gatopoulos, The Associated Press 0

ATHENS, Greece – Greece no longer has too many public servants and is close to reaching staff reduction targets demanded by bailout lenders two years before the deadline, the government said Friday.

Administrative Reform Minister Kyriakos Mitsotakis also insisted that his bailed out eurozone member country is on the brink of recovery.

The number of workers on the state payroll has been slashed from 913,000 at the end of 2009 to 681,392 on Nov. 30, with annual spending on wage costs reduced by just over one-third, the government said.

Greece’s once massive public sector — about 20 per cent of all jobs in the country before the crisis — and lax spending controls are often cited as key reasons for the nation’s financial turmoil and international bailout.

Rescue loans from other eurozone countries and the International Monetary Fund helped Greece dodge bankruptcy after it lost market access in 2010. As a condition to receiving 240 billion euros ($328 billion) in the bailout packages, Greece agreed to reduce the number of people on the state payroll by 150,000 by the end of 2015.

“The reality shown by the data is not widely known by the public and our creditors,” Mitsotakis said. “The main challenge for 2014 is the shift from quantitative targets to qualitative ones. … The problem with the public sector, now, isn’t that it’s too large, but that it’s ineffective.”

He made the remarks during a debate in parliament for the 2014 budget to end with a midnight vote Saturday.

Greece is struggling to complete its latest round of negotiations with bailout lenders, with the pace of staff cuts among the issues that must be resolved and ultimately allow Greece to qualify for long term debt-relief from its creditors.

The government is predicting a modest return to growth next year after a six-year recession that erased more than a fifth of its output and left the national debt at around 175 per cent of its gross domestic product.

A spokesman for the main opposition party, Syriza, described the 2014 budget as a “crime,” noting continued cuts in government spending on health and other services.

“You’re only concern is to repay debts without any delay, while you continue to commit a crime against the public,” lawmaker Panagiotis Lafazanis said.

“Lengthening debt repayment terms and reducing the interest further will not work. The only way the country will breathe again is if a large part of its debt is cancelled,” he said.

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