Greece to cut pensions, up taxes and fire state staff for bailout
GREECE will slash state pensions, increase emergency property taxes and put tens of thousands of public workers on notice in order to secure €8bn in emergency loans next month.
The plan to sack public sector workers and cut benefits is part of a deal to secure €8bn of rescue loans from the EU and the IMF, officials said yesterday.
Greece is due to receive the cash in October as the final payment under the first Greek bailout agreed in May 2010.
The cash only has to be paid if the officials overseeing the bailout are satisfied that the country is complying with the conditions attached to the loans.
A second Greek bailout deal has already been negotiated but European leaders are squabbling about how, and even if, the deal will be implemented.
Last night the Greek cabinet agreed to cut 20pc off state pensions that are higher than €1,200 a month and reduce payments for public sector workers who retired before the age of 55 by 40pc, or up to €1,000, according to an official statement.
"The risk is that the system, the financial sector and the real economy stop functioning" without the funds, Finance Minister Evangelos Venizelos said.
"We tried to find the most just measures possible," said one of the officials.
The government will also extend a new property tax hike that was originally slated to expire next year until at least 2014.
Thirty thousand public sector workers will be added to a "labour reserve" this year, the official said.
That means being put on 12 months' leave at 60pc of their normal wages and told to find alternative state sector positions or lose their jobs. (Additional reporting Reuters and Bloomberg)