By Vassilis Kostoulas
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The zeal of Greece’s institutional creditors and the Tsipras coalition government to meet ambitious annual primary budget surplus targets apparently doesn’t extend to areas of state spending that, to a large extent, were the source of previous massive budget deficits – which ignited the punishing Greek crisis in late 2009 in the first place.
With general elections now less than a year away and with ruling SYRIZA party trailing the center-right main opposition by double-digit percentage points in practically all mainstream opinion polls over the past year and a half, it was no surprise last week that various ministers and much of the pro-government press presented the mere announcement of 34,000 public sector hirings, over the next two years, as a stupendous “success”.
Nevertheless, the latest figures show that an oft-repeated pledge to maintain a 1:1 ratio in terms of public sector hirings – one hire for each employee that departs the state payroll – has been abandoned since 2016.
Up until 2016, the sixth straight year of adherence to a bailout memorandum program, the ratio was a strict 5:1. What official figures showed, however, is that 9,810 people were struck from the state payroll, but with 8,211 added.
In 2017 the same ratio was revised to 4:1. In reality, 7,595 public sector employees departed, and were replaced 7,063 new ones. However, another 1,455 people were hired in sectors that are excluded from restrictions applied to regular civil service staff, essentially meaning that 8,518 added to the state payroll.
The current year, 2018, witnessed a further loosening of the ratio, at 3:1. By August 2018, 5,177 civil servants had departed – with official data showing that practically all opted for retirement – and were replaced with 4,517 new hirings – of which 919 are excluded from the agreed to ratio. The medium-term fiscal adjustment program, in fact, stipulates 7,906 departures from the public sector and 7,266 hirings in 2018.
The result is a 1:1 ratio in 2016, instead of five departures for every new hiring; a 1:1 ratio again in 2017, instead of 4:1 and finally, in 2018 so far, 1.4:1.
All of the figures emanate from a memorandum-imposed human resources registry that the Greek state must now compile.
The trend shows that public sector hirings for the struggling coalition government are, essentially, an end in itself and a fundamental component of its mostly hard left political narrative, i.e. more state jobs reduce unemployment and vital needs in the wider public sector are being filled.
As previously cited, departing a spot in Greece’s cavernous public sector is practically always associated with retirement.
In fact, a well-known Eurostat statistic bedeviling the Greek state budget is that roughly 60 percent of annual contributions and taxes collected goes towards covering public sector salaries and social security spending.
An ‘accounting trick’ with clergymen’s payroll?
Faced with disappointing opinion polls results, fissures in his coalition’s unity and lackluster performances in the real economy, but still determined to stay in office until the very last day, Tsipras and a coterie of ministers last week announced no less than 34,500 new jobs in thrice bailed out Greece’s wider public sector.
In a bid to head off predictable and harsh criticism that the Greek state was again revisiting its spendthrift ways and seeking to inflate the state sector, Tsipras initially pointed to more physicians, nursing staff and teachers being hired, instead of what critics derisively call “make work” positions.
Moreover, a provisional agreement abruptly announced last week by Tsipras and Archbishop of Athens and All Greece Ieronymos to “revise” church-state relations served as the impetus for proposed “avalanche” in new state jobs – which will ostensible be created after general elections in 2019.
The highlight of the Tsipras-Ieronymos agreement is that roughly 10,000 Eastern Orthodox clergymen in the country will be removed from the state’s payroll – where they receive salaries as low-level civil servants – to make way for new hirings.
At the same time, Tsipras promised an annual “subsidy” by the state to cover the current payroll for the dominant Greek Orthodox Church’s clergy, assuming that the tentative agreement is ratified and implemented.
Even if such a prospect clears all political, bureaucratic and judicial “hurdles” in Greece, it’s not certain that Eurostat and European creditors will accept a “new”, permanent and annual 200-million-euro subsidy that merely shifts state spending from one ledger (civil servants’ remuneration) to another, by saying that the latter is financed by whatever extra “fiscal space” is achieved from high annual primary budget surpluses – the latter being mostly the product of a tax, surcharges and social security contributions “tsunami” unleashed by the Tsipras government in 2016.
