New cuts of 1bil euros in wages and pensions

The economy team are aiming at cutting the wages and pensions of public servants by another billion euros. To achieve this, they are counting heavily on the unified payroll that will be implemented by July 1st 2011.

Officials from the ministry of Finance estimate that with the implementation of the unified payroll, wage costs will decrease by 0,5% to 0,7% of the GDP on an annual basis. This will be achieved by further cuts or the removal of benefits, through transfers and the abolition of certain posts, but mainly through the cancellation of special benefits and the total equalisation of wages in the public sector.

The same sources underlined that in 2009 payroll costs reached 11,7% of the GDP. With the 2010 cuts, they decreased to 10,7% and the target now is the European average of 10%. If it does reach 10,2%-10,3%, 1bil euros will have been saved.

The main goal of the new payroll will be to abolish the bonuses awarded in heaps to employees, even if they don’t do the same job. On the contrary, those that do the same job should have the same salary, regardless of the ministry to which they belong.

With these cuts, thousands of public servants will watch their wages shrink, along with the pension for which they were hoping. The basic principles of the unified payroll are expected to be finalized by the end of February ifor submission to the Troika, who will be in Athens for the next audit.