ATHENS, Greece - 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.
The announcement signals a major 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.
Greece is racing to push through painful reforms and clinch a C130 billion ($170 billion) bailout deal from its European partners and the International Monetary Fund to avoid a March default on its bond payments.
Debt-ridden Greece has been kept solvent since May 2010 by payments from a C110 billion ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.
Its implementation depends on the austerity measures but also on separate talks with banks and other private bondholders to forgive C100 billion ($131.6 billion) in Greek debt, in exchange for a cash payment and new bonds worth 50 per cent less than the original face value, longer repayment terms and a cut in the interest rate to be paid on the bonds. Those close to the negotiations expect private investors to take an overall cut of up to 70 per cent on the value of their bonds.
But delays in negotiations with rescue creditors pushed a crucial meeting of coalition party leaders back by one day to Tuesday.
"We are opposed to indiscriminate firings," Reppas said. "The work force reduction is strictly connected with the restructuring of services and organizations at each ministry."
Officials at the Public Sector Reform Minister gave no details of the new plan, or say how many of the job cuts would be compulsory.
Greece has promised to reduce its 750,000-strong broader public sector by 150,000 by the end of 2015, but has so far insisted it could reach that target through staff attrition.
