ATHENS – With Greece’s highest administrative court, the Council of State, likely to order retroactive payments of slashed pensions and wage cuts, Prime Minister and Radical Left SYRIZA leader Alexis Tsipras is reportedly looking at ways to counter the fiscal effect.
The government is also expected to make the retroactive payments in installments instead of a lump sum in a bid to mitigate the cost of the returns on the economy, said Kathimerini, with Tsipras eager to curry favor in an election year but deal with the effect of payments and reduce the impact on the budget.
The government also reportedly wants to get permission from the country’s creditors to exclude the cost of paying back benefits in calculations toward the primary budget surplus target so they wouldn’t count against the target of 3.5 percent of Gross Domestic Product (GDP) Tsipras earlier had said was too high and unsustainable.
The payment would still be calculated in the official figures of the Hellenic Statistical Authority (ELSTAT) technically speaking, the paper said, along with recapitalization of banks that could get another bailout.
The main source of the retroactive claims with a permanent impact on the budget is the return of two-month annual holiday bonuses to civil servants and pensioners that was stripped over the near nine-year-long economic and austerity crisis.
With each civil servant set to get 1,000 euros ($1126.23) per year and every pensioner 800 euros ($900.98) the yearly fiscal cost from the restoration of the bonuses is estimated at up to 3.4 billion euros ($3.83 billion,) considered too high for the budget to take it.
Among the measures under consideration are transforming the 12 monthly salaries of civil servants into 14, to include the Christmas, Easter and summer bonuses, thereby slashing the each month’s salary.
Another possible measure, the paper said, is cutting bonuses from the current level of 1,000 euros annually although dealing with the pensioners bonuses would likely require a more gradual reduction.