×

Greece overturns civil service reforms

Greek Finance Minister Yanis Varoufakis arrives at a European Union finance ministers meeting in Brussels February 17, 2015.
Francois Lenoir | Reuters
Greek Finance Minister Yanis Varoufakis arrives at a European Union finance ministers meeting in Brussels February 17, 2015.

Even as the Greek government scrambled to reach an agreement on new economic reforms with its creditors in Brussels, it began reversing similar measures agreed during previous bailout negotiations in a parliamentary session in Athens.

A new law proposed by the leftwing Syriza-led government and passed Tuesday night opens the way to rehire thousands of workers cut loose from the country's inefficient public sector in a reform enacted by the previous government.

The move came on the same day the new government announced changes to a finance ministry system of electronic procurements and public payments that was supposed to improve transparency and had been blessed by international lenders.

And it followed legislation passed last week to reopen the state broadcaster, ERT, which was shut down by the previous government as a cost-cutting measure.

The moves highlighted the conflicting impulses of Greece's new left-wing government and creditors bent on securing economic reforms in exchange for their support.

They could further complicate already-fraught negotiations aimed at closing the country's current €172bn bailout and giving Athens access to €7.2bn in desperately needed cash; in February, the new government agreed any economic legislation would be introduced only after consultations with creditors.

Opposition lawmakers accused Syriza of violating that agreement with the new laws, which could expand the government payroll by as many as 15,000 employees.

But government ministers remained defiant. "We aren't going to consult [bailout monitors], we don't have to, we're a sovereign state," Nikos Voutsis, the powerful interior minister, told parliament.

Although bailout talks in Brussels have finally picked up pace after months of false starts, deep divisions over substance remain. Officials said the chances were fading of any endorsement of their progress at a meeting of eurozone finance ministers on Monday.

Greek officials had hoped such an endorsement would convince the European Central Bank to lift its current cap on the amount of short-term debt Athens can issue, easing its cash crunch. But EU officials said progress was so slow that no such statement is likely.

Read MoreGreece makes $224M payment amid 'nail-biting' talks

According to two officials involved in the talks, the Greek finance ministry failed to send most of its technical experts to the Brussels negotiations until Monday, and they arrived only after European leaders placed a call to Alexis Tsipras, the prime minister.

In recent days, Athens has instead sought to divide its creditors amid growing signs two of them — the International Monetary Fund and the European Commission — are at odds over how to approach the ongoing stand-off.

According to officials involved in the talks, the IMF has raised the possibility that Greek debt relief might be necessary and has taken a hard line on the reforms Athens must implement, while the commission has urged compromise.

After Athens publicly blamed those differences for stalling talks, all three Greek creditors — the commission, IMF and ECB — were forced to put out a statement on Wednesday insisting they "share the same objective" in Greece.

The latest Greek law calls for the rehiring of about 13,000 civil servants whose jobs were cut in an overhaul of public administration agreed by with bailout lenders by the previous Greek government. It also eliminated annual evaluations for civil servants and promotions based on merit.

More from The Financial Times:

Fracking: The energy revolution that shook the world
Share prices 'quite high', says Yellen
Low productivity alarms US policy makers

Giorgos Katrougalos, the leftwing Syriza-led government's deputy minister for administrative reform, said similar rollbacks were in store. "This is not our last word, it's the first step of [administrative] reforms we're going to make that won't be neoliberal but will have a social aspect," he said.

The municipal police force, which was disbanded 18 months ago, will be revived and several thousand caretakers at state schools, known as "guards", are to be rehired.

Kyriakos Mitsotakis, who — as the previous government's minister for administrative reform — implemented past cuts, said Syriza's legislation marked a return to the clientelist practices of the past.

"It's not just the hirings, but a lack of transparency . . . and the reversal of new disciplinary procedures that had proved very effective," Mr Mitsotakis said.

Nikos Pappas, minister of state with responsibility for the media, said the reopening of the state broadcaster would include the rehiring of 1,500 employees at a cost of €30m to be covered from the auction of television licenses.

When Antonis Samaras, the previous prime minister, closed ERT in a deeply unpopular move, he called it a "haven of wasteful spending." About 2,600 employees lost their jobs but 700 others were hired by a slimmed-down successor known as Nerit. Under the Syriza plan, Nerit staff will be moved to ERT.