Lenders want to see as many as 150,000 redundancies over four years with 25,000 with immediate effect
A full mission of international inspectors is set to return to Greece early next week, after progress was made between the mission heads and Greek officials, the European commission has said.
The mission, composed of representatives of the European Commission, the European Central Bank and the International Monetary Fund, will establish whether Athens has met the agreed criteria for the disbursement of the next tranche of emergency loans.
"On Tuesday 20 September, the mission chiefs ? held a conference call with the Greek minister of finance, Evangelos Venizelos, and senior officials at his ministry," the commission said in a statement.
"Good progress was made and technical discussions will continue in Athens over the coming days.
"The full mission is now expected to come back to Athens early next week to resume the review, including policy discussions," the statement said.
The decision of the mission as to whether Greece is on track with its agreed austerity reforms is crucial for the release of the next tranche of aid for Greece, worth ?8bn (�6.9bn), in mid-October.
But while the rescue loan can be taken as read, according to officials, Greece's debt drama is far from over. A growing number of European policymakers are saying that while the country's future in the eurozone is assured, it is only a matter of time before it defaults on its debt.
Partly because of this, Athens' "troika" of international lenders want guarantees. After being presented with a ?2bn budget shortfall this month, the international community wants to ensure that there is no slippage from next year's targeted budget deficit of 6.5% of GDP.
The prospect of further austerity has panicked senior members of the ruling socialist Pasok party, whose traditional power base is in the public sector. The "troika" of lenders is demanding "shock and awe" reforms rather than the softly, softly approach the government has taken so far.
Officials cited in the Greek media said lenders want to see as many as 150,000 redundancies in the next four years, with at least 25,000 taking place immediately. Scores of state-owned entities will also be closed.
With economic output in steep decline, Greek unemployment has reached a record 16%.
Addressing an economic conference in the capital this week, the IMF's permanent representative, Bob Traa, said the focus should be on shrinking the state ? by far the country's biggest employer ? rather than bringing in revenues through a tax collection system that has proved notoriously inefficient.For the centre left government there is growing recognition that guarantees will have to take the form of further belt-tightening among a nation that has endured a barrage of wage cuts, pension reductions, price rises and tax increases and in many cases has seen its purchasing power fall dramatically
Venizelos, a one-time statist par excellence, surprised Greeks by agreeing that the time had come to take an axe to the public sector. "There is a surplus of staff in the wider public sector and the more narrow public sector," he said.
Source: http://www.guardian.co.uk/business/2011/sep/20/european-debt-crisis-greece-bailout
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