FACTBOX-Five areas of Greek budget waste

April 28 Wed Apr 28, 2010 2:27pm EDT

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April 28 (Reuters) - From a bonus for showing up to work to a dead father's pension going to an unmarried daughter, arcane benefits bloat Greece's budget by billions of euros a year.

As part of its efforts to end its debt crisis and escape default, Greece has pledged to start cutting back on such largesse, but decades of chaotic accounting at ministries means the exact statistics are hard to come by.

Below are examples of some of the spending the government could cut:

SPOILED SPINSTERS

Tens of thousands of unmarried or divorced daughters of civil servants collect their dead parents' pensions, weighing on a social security system experts say will collapse in 15 years unless it is overhauled.

About 40,000 women benefit from the allowance at an annual cost of around 550 million euros, according to economic website capital.gr.

While the law protects civil servants from dismissal, it allows them to retire with a pension in their 40s.

Greek pension spending is expected to rise by 12 percent of gross domestic product by 2050, according to EU Commission data. That compares with an EU average of less than 3 percent of GDP.

The government has pledged to overhaul the social security system by raising the retirement age and banning early retirement. It plans a bill by May.

CHRISTMAS PRESENTS

In a system where bonuses can add 5 to 1,300 euros to a monthly paycheck, some civil servants are paid extra for using a computer. Some get a bonus for speaking a foreign language and others for arriving at work on time, while many foresters get a bonus for working outdoors. All Greek public and private sector workers get 14 salaries a year, a structure aimed at keeping basic monthly salaries, and the pensions that are based on them, low.

Half a month's extra salary is paid at Easter and another half during the summer. The 14th salary is paid to civil servants at Christmas when the whole economy is geared to consuming it; taxis, restaurants and hairdressers are legally allowed to charge extra as "a Christmas present".

The government has already trimmed most bonuses by 12 percent and Christmas and Easter salary bonuses by 30 percent as part of its austerity plan, saving 1.7 billion euros.

FLYING FOR FREE

Labour unions foiled government attempts to sell debt-ridden Olympic Airways for decades, costing Greek taxpayers millions while employees enjoyed generous benefits -- their family members could fly around the world for free.

The EU took disciplinary measures against Athens for pouring state money into the loss-making airline, even after private local airlines began servicing similar routes for less.

Olympic was sold in 2008, but only after the state lavishly compensated or re-hired about 4,600 employees. Many blocked Athens' thoroughfares recently because they had not received all their severance money.

The state owns 74 companies, mainly utilities and transport firms, many of which are overstaffed and loss-making, the OECD says. The main rail company employs about 9,000 people and reported losses of 800 million euros in 2008.

The government has said it will merge some state companies and sell stakes in others.

COMMITTEE FOR WHAT?

Hundreds of state-appointed committees employ staff though it is not clear what they all do. Greece has a committee to manage Lake Kopais, which dried out in the 1930s.

One Greek paper estimated that committees employ more than 10,000 people and cost over 220 million euros a year.

Coming through on a pre-election pledge to cut such waste, the government recently announced it would shut down or merge at least 200 such committees that have outlived their usefulness.

COSTLY ARMS

Tensions with arch-rival Turkey have kept Greek military spending well above that of other EU members, reaching 14 billion euros, or 6 percent of GDP, in 2007 and 2009.

Budget woes have limited military procurements and the 2010 defence budget now stands at 6.7 billion euros ($8.92 billion).

But nearly 80 percent of Defence Ministry spending goes on administrative costs and payments of army staff. The government has said it will gradually reduce costs and spending on arms purchases will be contained to 1.8 billion euros (0.7 percent of GDP) this year. (Reporting by Renee Maltezou; Writing by Dina Kyriakidou, Editng by Lin Noueihed)

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