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Victoria Mindova

The problem with the public workers in Greece remains unresolved, as is evident after a nearly four-hour meeting of the representatives of the International Monetary Fund, the European Central Bank and the European Commission with Minister of Finance Yiannis Stournaras and Minister of Labour Yiannis Manitakis.

Greece is constantly lagging behind in meeting its obligations under the bailout agreement with the international lenders. At present, the biggest obstacle that separates Greece from the next support tranche is the firm resistance against the insistence of the government to reduce the size and cost of the public sphere.

"Public workers are just the tip of the iceberg," a Greek economic analyst told GRReporter. "Lenders want greater independence of tax services, more effective control over the collection of tax revenues and real market liberalization of any aggravating government restrictions."

The mission’s representatives are dissatisfied with the law enforcement in Greece. Although the regulatory framework related to market liberalization has been changed, the local government has not yet implemented the law in practice. The economy cannot move forward because the government's attention remains focused on keeping the jobs in the public sector rather than on stimulating the production.
 
Despite the lenders’ persistence, the issue of the layoffs in the public sector continues to be a "sacred cow." After an hour and a half of negotiations, Minister of Finance Yiannis Stournaras appeared along with Minister of Labour Yiannis Manitakis to confirm that the climate in the government was good. However, Stournaras returned to the negotiating table, leaving journalists with the feeling that the government was still far from reaching an agreement on how to proceed with the reforms. This feeling was confirmed later in the evening when the ministry refused to deliver a briefing on the meeting and scheduled a new meeting with the lenders for the next day.

There has been growing tension between the representatives in office in recent weeks. The Minister of Labour has been accused of making government unionism, being one of the biggest opponents of the direct layoffs in the public sector. "We need to send further details to be able to conclude the negotiations," Manitakis told reporters after the meeting.

Members of the coalition said that they have reached a new agreement with the lenders, which suggests that two thousand public workers who have violated the law should be laid off. These are officials convicted of violations, who should be dismissed by the end of the summer. In addition, another five thousand public workers will be dismissed by the end of the year, following the closure and reforms of various public organizations. This means that in 2013, the government will get rid of about seven thousand public workers.

It seems that the greatest burden of clearing the public sector will be shifted to 2014. Then, another 20,000 public workers will be dismissed, without clarifying whether they will be laid off or if they will be included in the labour reserve. Reaching an agreement between the government and the lenders is crucial for the payment of the next two instalments of total value 8.8 billion euro.

Meanwhile, the main indicator of the Athens Stock Exchange recorded an increase of 5.75% and the shares of the National Bank of Greece closed with a positive result of 1.7%. The value of Eurobank’s shares increased again after yesterday’s collapse and recorded 29.8% growth.

Yiannis Stournaras announced that a working group has been formed to reassess over the next three months the tax assessments of real estate in the country. The sharp decline in the real estate market has led to a serious discrepancy between the market and the tax assessment of property. The taxes levied on real estate prove to be disproportionate to their real value, and according to sources close to the ministry, the government will try to balance the market.