Greece to cut 15,000 civil service jobs as bail-out deadline looms

Published on Tuesday 7 February 2012 00:00

Greece’s coalition government last night 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 policy, as state jobs have so far been protected during the country’s acute financial crisis.

Greece is racing to push through painful reforms and clinch a €130 billion bail-out deal from its European partners and the International Monetary Fund to avoid a March default on its bond payments.

Its implementation also depends on talks with banks and other private bondholders to forgive €100bn in Greek debt, in exchange for a cash payment and new bonds worth 50 per cent 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 per cent on the value of their bonds.

The government has promised to cut 150,000 public sector jobs by the end of 2015, but has so far insisted it could reach that target through staff attrition.