ATHENS, Greece — Greece’s coalition government on Monday caved in to demands to cut civil-service jobs, announcing 15,000 positions would go this year, amid mounting international pressure to agree on austerity measures needed to secure major new debt agreements.
The announcement signals a shift in Greece’s policy, as state jobs had so far been protected during the country’s acute financial crisis, which started about two years ago. Public Sector Reform Minister Dimitris Reppas said the job cuts would be carried out under a new law that allows such firings.
Unions have called a 24-hour general strike for today in response to the new austerity measures, while about 4,000 protesters braved torrential rain late Monday to join protest rallies organized in central Athens by left-wing opposition parties.
Greece is racing to push through the painful reforms — which have yet to be agreed upon by Greece’s coalition partners — to clinch a $170 billion bailout deal from its European partners and the International Monetary Fund and avoid a March default on its bond repayments.
Debt-ridden Greece has been kept solvent since May 2010 by payments from a $145 billion international rescue-loan package. When it became clear the money would not be enough, a second bailout was decided on in October.
As well as the austerity measures, the bailout also depends on separate talks with banks and other private bondholders to forgive $131.6 billion in Greek debt. The private investors have been locked in negotiations over swapping their current debt for a cash payment and new bonds worth 50 percent less than the original face value, longer repayment terms and a cut in the interest rate to be paid on the bonds. Greek government officials say they expect private investors to take an overall cut of up to 70 percent on the value of their bonds.
Creditors are also demanding spending cuts in defense, health and social security, a cut in the minimum wage, as well as the civil-service layoffs, as European pressure increased on Greece to make more concessions. The government has promised to reduce the 750,000-strong broader public sector by 150,000 by the end of 2015 but has so far insisted it could reach that target through staff attrition.
