Greek Government Crisis No 2: The Hot Potato of “Labour Reserve”

Posted by in Economy, Politics

Greece’s three-party coalition government faces a new test. The cohesion of Samara’s government is under strong pressure due to some measures essential to reach the volume of 11.5 billion euro spending cuts. Precisely the issue of “labour reserve” in the public sector threatens to bring Greek government into falling apart.

Two junior government partners, socialist PASOK and Democratic Left,  refuse to give the green light to a scheme that would send home with 60% of their wages for one or three years at least 45,000 civil servants.  After this period of time, the perspective is either retirement or unemployment.

According to Greek media, senior government partner Nea Dimocratia works out a plan to integrate in the scheme of ‘labour reserve’ civil servants with up to five years before retirement and civil servants from merged or closed down state organisations. 45,000 civil servants should go to labour reserve -gradually form 1.1. 2013 to 2015, while the temporary contracts of 25,000 employees should not be extended.

The dispute enflamed on Tuesday, after statements by Finance Ministry top brasses brought back on the agenda, the labour reserve – a spending cut scheme that was so dramatically unsuccessfully applied by the Papandreou government that ended in a sound fiasco. From the target of 15,000 civil servants to be sent to ‘labour reserve” lnly 765 people were sent home.

PASOK and DEMLEFT were taken by surprise and claimed that they heard about these measures form the television screen. 

PASOK and Democratic Left claim, that such a measure typically goes beyond the policy framework agreement between the coalition government partners and the endurance of their parties.

PASOK-leader Evangelos Venizelos expressed doubts over the success of the scheme and also his opposition to lay-offs in the public administration. “I have committed myself before the elections that there would be no lay-offs in the public sector, Venizelos told reporters.

In the same tune, Fotis Kouvelis (DEMLEFT) stated he was categorically against such a scheme as it wouldn’t solve any of the fiscal problems the country faces.

 Sources told Kathimerini that Democratic Left chief Fotis Kouvelis expressed his opposition to the measure, leaving Prime Minister Antonis Samaras in no doubt that another option should be considered. Kouvelis pointed out that when the scheme was adopted last year, it was soon abandoned as only a few thousand civil servants were placed in the labor pool, where they earn 60 percent of their salary but do not need to go to work. (ekathimerini)

Furthermore, Venizelos and Kouvelis are at odds with Finance Minister Yiannis Stournaras. They claim that they were taken by surprise about the ‘labour reserve’ as they heard about this “government plan” from the television screens on Tuesday. Allegedly Kouvelis told Stournaras “Why do you make statements as if we had agreed on the labour reserve?”

 Last week Venizelos reportedly accused Stournaras of leaking the austeiry measures to the press.

Party-independent, non-elected and (former?) PASOK affiliated Yiannis Stournaras follows Samaras’  guidelines. “We must get save 11.5 billion euro. And we will,” Stournaras declared.

How the governement partners will manage to bridge their differences is remain to be seen.

PS At the same time, average Greeks and opposition parties started to  bet on the life expectancy of the government.

The first crisis among the government partners broke in the beginning of August over the 11.5 billion euro package as a whole.