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Greece needs public sector reform, not just cuts-troika official
December 16, 2011 / 2:55 PM / 6 years ago

Greece needs public sector reform, not just cuts-troika official

* Troika official deeply disappointed by public sector cuts

* Under bailout, 150,000 public sector jobs to be lost

* Official says labour reserve strategy not rational

By Ingrid Melander

ATHENS, Dec 16 (Reuters) - Greece must conduct a proper overhaul of its inefficient public service rather than simply making blind cuts, a top official from an international inspection team said on Friday, adding that Athens was falling behind on promised reforms.

The official from the International Monetary Fund, European Union and European Central Bank “troika” was deeply critical of the public sector cuts so far imposed by the Greek government as it struggles to cut its crushing public debt.

“I want to know that there is a proper reform of the public sector and that is not happening yet,” the official, who spoke on condition of anonymity, told Reuters.

About ten thousand state workers have been put into a so-called labour reserve, a special scheme that will lead to redundancy, but many of those on the programme were close to retirement in any case and amid the haste, little thought was given to where the cuts would fall.

“The way it is implemented, in my view, is not rational,” the official said. “They do horizontal cuts. This is not a public sector reform. It is a brutal downsizing but it does not make sense.”


Under the terms of the EU/IMF bailout that saved Greece from bankruptcy last year, the country must reduce its public sector workforce by 150,000 between 2010 and end-2015.

“They have to determine which units are superfluous, where there are phantom units that have no task any longer, and these people should be reallocated or sacked. There are other areas that are understaffed,” the official said.

The comments underline the pressures facing Prime Minister Lucas Papademos, the former central banker appointed to succeed Socialist George Papandreou last month and who is now racing to secure a new international bailout deal.

Facing a fifth year of recession in 2012 and squeezed between street protests and international creditors demanding ever tougher austerity measures, Papademos has seen an initial bout of public support crumble.

The troika team in Athens this week found significant shortfalls in the pace of reform. Poul Thomsen, the IMF mission chief for Greece, said on Wednesday taboos, including shutting down state firms and cutting jobs, had to be considered.

In a blunt assessment this month, the Organisation for Economic Cooperation and Development said a “big bang” overhaul was needed.

“The current hierarchy is top heavy, with senior civil servants sometimes in charge of ‘ghost’ departments,” the report said. “There is no effective structure of middle management. Ministries are affected by organisational sprawl, redundant structures and too many units.”

It said the efforts of competent individuals willing to implement reforms “are undermined or even nullified by the behaviour and actions of others whose standards and values are not the same.”

Government efforts to cut the public sector payroll have been held back by constitutional job protection guarantees for state employees but the official said it should be possible to make cuts even so.

“There are legal and constitutional constraints but if, on the basis of a proper analysis, it is decided certain tasks should be dismantled, the constitution allows people to be sacked,” the troika official said.

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