Radical reform of public sector employment

In late October 2012, the Greek government adopted a new framework for public sector employment relations, paving the way for more sweeping changes for public sector workers. In an effort to cut the country’s budget deficit, there has already been a reduction in recruitment, as well as cuts to wages and benefits. New rules focus on the nature of public sector employment itself, with terms of employment for civil servants being brought into line with workers in the private sector.

Background

Public sector reforms in Greece started long before the country’s first bailout package in the spring of 2010. Before the conclusion of the first loan agreement, reform of employment relations for workers in central government and the broader public sector was implemented through a series of statutory interventions.

The reforms continued after the execution of the related Memorandum in May 2010, in the context of Greece’s obligations that derived from the European Union (EU) and International Monetary Fund (IMF) loan deal.

Among the reforms were:

  • a pay freeze in the entire public sector, in the Local Government Organisations (ΟΤΑ) and in the Public Utility Companies (DEKO) for 2010 and 2011;
  • the direct reduction of wages and benefits and the setting of a ceiling on maximum earnings for all employees involved independently of their income and in all companies of the public sector;
  • the replacement of the annual leave, Christmas and Easter bonuses that were traditionally determined by an individual's monthly wage with fixed, flat-rate amounts;
  • the reduction in recruitment by establishing a rule of ‘one person hired per five persons retiring’ for 2010, and then ‘one person hired per ten persons retiring’ for 2011;
  • making it possible, for the first time, for unemployed workers aged 55 to 64 to be hired by central government through temporary employment agencies, with their social security obligations being covered by the Greek Manpower Employment Organisation (OAED);
  • making it possible for Public Utility Companies take on an employee under a part-time employment contract.

More changes during 2011

The adoption of the medium-term budgetary adjustment framework, and especially the related implementation law on working time flexibility passed in June 2011 (Law 3986/2011), brought about significant institutional reforms in the labour law applicable to civil servants. These included:

  • the increase of weekly working time from 37.5 to 40 hours without a proportional pay rise;
  • the introduction of optional part-time employment by up to 50% on a daily or weekly basis and for up to five years, with a proportional wage cut;
  • the introduction of intersectoral mobility of civil servants, giving workers the opportunity to take unpaid leave of absence for a maximum of five years;
  • the introduction of interdepartmental mobility of public sector employees and the introduction of the ‘labour reserve’ scheme for staff close to retirement, offering them a proportion of their salary for a period of between three and five years without having to work.

These latter two regulations subsequently constituted two of the major interventions introduced by the recent Law 4024/2011, which brings about a major shake-up in public-sector employment relations.

Administrative reform 2011–2013

Law 4024/2011, passed in October 2011, marked the beginning of a very short period of radical reform of public administration, completed by the end of 2011.

It introduced the new role of State Servant, which implies that a worker is employed in the public administration in general, but not in a specific department, making it possible to transfer a worker to any position and to any department.

A new pay scale was introduced in an attempt to align public sector employees with those in the private sector, and resulting in pay cuts for public employees.

At the same time, the trade unions had their powers cut. Under new rules, public sector bodies would no longer have an obligation to recognise unions, and unions would no longer have to be consulted over planned restructuring of public services. This reform will be implemented after special evaluation of the public services and employees, which will be carried out by private companies. This evaluation had been scheduled to take place during 2012, but has now been postponed to 2013.

Finally, the options of pre-retirement non-active status and paid reserve status will be introduced as a way of reducing the total wage bill. The first option applies to civil servants, who, provided they turn 55 and complete 35 years of service by 31 December 2013, are immediately placed in pre-retirement non-active status until that double requirement is fulfilled. They will then receive their retirement pension. During non-active status they will receive 60% of the basic wage, from which any income earned from salaried or other professional activity in the private sector will be deducted.

The second option applies to those employed under private-law contracts in the core public sector and the broader public sector. More specifically, it applies to two sub-categories:

  • employees in public companies that were abolished or merged pursuant to previous laws (particularly Law 4002/2011);
  • all the remaining employees who complete 35 years of service and reach the age limit required for a full pension by 31 December 2013.

In both cases, employees are placed on a labour reserve status for up to 12 months and receive 60% of the basic wage. At the end of this period, employees in the first sub-category are dismissed without receiving any severance pay, whereas those of the second sub-category receive a full pension.

Trade union reaction

Trade unions have condemned the abolition of permanent jobs for civil servants, and the dismissal of an additional 150,000 employees originally planned for spring 2012 but not yet implemented. They have condemned the institutional downgrading of the bargaining role of the trade unions in the public sector. They are also angry about the complete absence of social dialogue when it comes to the implementation of important reforms concerning the employment relations of thousands of civil servants, and to the structure and operations of the public sector itself.

They say that the dismissal of tens of thousands of civil servants in such a short period of time will cause a rapid rise in unemployment, which is already estimated to be at 24%. The official unemployment rate stood at 19% in October 2011.

The trade unions, having in practice no capacity to intervene and be consulted at institutional level, are calling for strikes and are planning sit-ins. At the same time, they are considering an appeal to the courts, claiming that both the labour reserve and the abolition of tenure for civil servants contravene the Greek Constitution.

Commentary

The recent measures, especially those establishing pre-retirement non-active status and labour reserve status, are causing great concern to employees and to the general public in Greece who benefit from the public services. They are worried about the effect of the closure and merger of public sector organisations.

The Greek people are especially fearful because up to 100% of a company’s employees may be placed in non-active or reserve status. On the contrary, in the context of the cutback in public spending, public services and organisations are invited to place 10% of their personnel in the reserve, a practice that will be repeated on an annual basis.

Apostolos Kapsalis, Labour Institute of Greek General Confederation of Labour (INE/GSEE)

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