Sunday 15 January 2012

The Troika, the Reform Programme and the Missing Labour Reserve

The other news from Greece this past week was the fact that the phantom labour reserve programme was officially shelved.

Minister of Administrative Reform Dimitris Reppas announced on Tuesday, 10 January that the labour reserve policy “bordered on the absurd and the ridiculous.” This policy, designed to place 30,000 public sector workers in a 12-month “labour reserve” at 60% of their pay, was designed under former Prime Minister George Papandreou as a means of avoiding, or at least minimizing the impact, of public sector cutbacks.

Minister Reppas further stated that firings of public sector personnel were not on his agenda. As quoted by Kathimerini’s English edition:

“We did not expect anything significant from a fiscal aspect and on the other hand there was the danger of public administration being unable to operate because of the loss of key personnel,” he said.

At the same time, Greece has clearly committed to downsizing the public sector by 150,000 workers by 2015.

So far, it is estimated by various sources that up to 10,000 public sector workers were placed in the “labour reserve” in 2011. Other sources claim that in fact many of these people claimed early retirement. Yet other sources say that the number of people placed in the reserve were in fact far less – on the order of 1,500 – 2,000 people.

While I share certain misgivings as to the efficiency of the labour reserve scheme, it is hard to underestimate just how much of an operational and public relations disaster this is for the Greek government.

On the one hand, Greece has committed to the labour reserve scheme since early 2011. This is the first step of a far larger public sector cutback.

Yet on the other hand, Minister Reppas is on public record disparaging the entire scheme, and abandoning it.

This clearly indicates that PASOK is still not behind the “reform” effort it has put it signature to, and indeed, has for the most part crafted. And apparently, Prime Minister Papademos is unable to enforce any sort of collective discipline on the matter.

Yet the commitments were made. If they were not the right commitments, they should have been refused at the time of their agreement. Not agreed to, and then rejected over one year later. This is otherwise known as hypocrisy.

With the Troika visiting Athens, I expect one or more of the following scenarios to unfold in the next few weeks:

a.     There is a strong chance that the Troika will break off the monitoring visit over lack of progress, repeating the scenario seen in August/September 2011. This will create yet another delay, exacerbated by the delay in agreeing to the PSI conditions.

b.     Prime Minister Papademos will force the restructuring the cabinet, removing certain “deep PASOK” ministers and installing “technocrats” in their place.

c.     Prime Minister Papademos threatens to resign, or resigns, on the lack of support for his premiership, and for the agreements that Greece itself has signed and agreed to implement. An election is then held, creating yet another self-destructive round of politicking and delay.

The self-destructive tendencies of the Greek political class should be manifest to everyone. Unfortunately, they threaten to drag everyone else in Greece down with them.

Related Post:

December 19, 2011

© Philip Ammerman, 2012

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