State job cuts on table at Greek loan talks

ATHENS: Greek officials were due to hold talks on Saturday with EU and IMF negotiators to free up urgently needed bailout loans, but the government and the lenders were reported to be at odds over how to meet a promise to lay off state workers.

Without a deal to release an 8 billion euro ($10.7 billion) tranche of an EU bailout, massively indebted Greece could run out of money to pay state wage bills within weeks.

European officials are scrambling to avert a default on Greek debts, which could wreck the balance sheets of European banks.

Negotiators from the International Monetary Fund, European Union and European Central Bank, known as the troika, left Greece a month ago saying they were not convinced Greece could carry out necessary spending cuts and tax hikes.

The negotiators returned this week after getting written assurances from the government that it would implement promised austerity measures.

Finance Minister Evangelos Venizelos was due to meet troika officials around midday, the Finance Ministry said.

To secure the next tranche of bailout loans, the Greek government has promised to impose tax hikes, slash public sector wages by an average of 20 percent and reduce the number of state workers by a fifth by 2015.

But the Greek constitution guarantees jobs for life to all state employees, making the promise to cut payroll numbers a legal and political minefield.

Greece has promised to start layoffs by putting 30,000 state workers in a "reserve" by the end of this year. Workers in the reserve would be paid 60 percent of their salaries for a year and then be dismissed if they cannot find new jobs.

The Ta Nea daily newspaper said troika officials were "disappointed" with progress in talks on the plan so far, expressing concern that laid-off state employees could go to court and win their jobs back.

The government has yet to give details about how it would decide which workers would be shunted into the reserve. Ta Nea said the troika was worried that only older workers already near pension age would go into the reserve, effectively turning it into an early retirement plan that would save little money.

The Greek government is expected to reach a decision on the reserve plan at a cabinet meeting on Sunday, when it will also discuss the budget for next year.