Greece qualifies for new bailout funds but must impose mass layoffs

The International Monetary Fund's troika representative to Greece, Poul Thomsen, speaks during a conference on the economy in central Athens on Monday. Greece cleared a key hurdle in its drive to receive its next batch of bailout loans after international debt inspectors said Monday they had reached an agreement over the country's economic reforms, including the firing of civil servants.

By Anthee Carassava

April 15, 2013 12 AM PT

ATHENS – With a critical monitoring mission completed, international debt inspectors gave Greece the nod Monday for an additional $13 billion in rescue aid but insisted that it had to ax thousands of civil servants as part of efforts to slash the country’s bloated – and costly – public sector.

Lenders from Europe and the International Monetary Fund have pressed successive Greek governments to implement mass layoffs since Athens signed up for its first bailout, worth $150 billion, three years ago. Despite widespread opposition, Greece’s three-party coalition agreed to the plan over the weekend, bowing to the tough new terms contained in a new multibillion-dollar bailout hammered out in December.

Without its latest installment of rescue funds, Athens would be unable to pay its bills and recapitalize the country’s struggling banking sector.

Poul Thomsen, the IMF’s representative in Greece, said that Athens would be able to avoid imposing further austerity cuts if it follows through on its pledge to overhaul the state sector.

“The fiscal adjustment in Greece has been exceptional by any standard,” Thomsen told an Athens conference on the economy.

Details of the layoff plan remained unclear. Still, for a country where one in five salaries are paid by the government, the looming layoffs break a century-old taboo: Civil servants were granted lifelong job security in 1911 in Greece’s constitution. That provision was aimed at stamping out politicization of the civil service, but it has been used as a tool of political patronage, bloating the public sector to its present size of about a million people.

Local press reports Monday suggested that about 4,000 civil servants would be laid off by the end of the year and 11,000 by the end of 2014. European and IMF debt inspectors said that the first phase of layoffs would be “targeted at disciplinary cases and cases of demonstrated incapacity, absenteeism, and poor performance, or that result from closure or mergers of government entities.”

With unemployment topping 27% and an acute recession deepening across the country, the government is braced for unrest. Representatives of Greece’s powerful civil servants’ union said officials were meeting Monday to decide on a course of strike action. Opposition politicians, too, were reeling.

“When you have an army of a million people already out of work, you cannot support these moves,” radical leftist leader Alexis Tsipras said. “We won’t. We will not allow for this play of human sacrificing to continue.”

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