HELLENIC REPUBLIC

Today the Cabinet discussed the whole range of major structural changes decided upon and which must now be implemented as soon and as intensively as possible. It is obvious that our greatest problem is the lack of competitiveness. Now is the time in our hour of crisis to change the face of the nation. We must now become competitive as a nation. We must overcome the crisis regaining the position that is due to Greece within the European and the world market.

If we do not fully implement these structural changes, if we do not change the way in which the country, the economy and society function, we will lose pace, we will not regain the ground lost due to the crisis and we will not give our children or the young generation the opportunity that our generation had. This is the greatest historical injustice in this land. Until now, each generation had the certainty that it enjoyed equal or more opportunities than its predecessor. Now, this sense of security is lacking from our children, from the young people.

Therefore, we have to give them back that feeling and we should give the Greek citizen the opportunity to feel proud again, because the Greek people’s wounded self-esteem and self-confidence is counterproductive and thus instead of escaping the crisis, we get the feeling that this is now a permanent, an incurable situation. And this is not so.

Greece is not the pariah of the European Union; it is not a permanent wound, a problem of the European Union. It is a country which is equal to the other member-states, a competitive country facing a very serious problem of government debt and budget deficit. This can and should be overcome. But we can not succeed unless we complete the structural changes.

If Greece financed by itself the program of fiscal adjustment, we would made our own choices. But now we are borrowing very large amounts of money from our institutional partners and thus we should be agreeing with them on the context of our fiscal consolidation. They have undertaken to help us in dealing with debt, help us to ensure that the public debt is sustainable. We have undertaken to reduce the budget deficit and turn it into a primary surplus.

But when it comes to structural changes, we need not to wait no troika and no memorandum to tell us what to do. The structural changes are not imposed on us from outside; they are an internal, existential need of the country.

Within the Cabinet therefore we have taken definitive decisions today for a whole range of very important issues:

The privatization program has a cash component. We must collect specific amounts: € 5 billion in 2011, € 28 billion by 2014. This is vital, but it is not everything. The most important thing is that privatizations mean a smarter state, a more functional state, which is friendlier to the citizen and costs less. Privatizations mean investment and new jobs. So we go ahead with privatizations.

The first wave of privatisations includes:

- the extension of the OPAP licence,

- the new OPAP licences,

- Athens International Airport for which we plan an extension of the concession period,

- the new mobile telephony frequencies concession,

- the Public Natural Gas Enterprise (DEPA),

- the Greek State’s stake in the Greek Petroleum Enterprise,

- the first group of properties with state services which can be sold and rented out again with substantial fiscal gain.

We proceed with all these immediately. The Inter-ministerial Privatisation Committee has been ordered by the Cabinet to transfer these public assets tomorrow to the State Fund for the Utilisation of Private Property. The same will happen very quickly for all the programmes maturing or those that the Fund itself must mature. The Fund has an all-party administration and observers from the Eurozone and the European Union and is acting under the auspices of the Parliament and the Court of Auditors.

Therefore, we take final decisions on privatization with cash and structural objectives that are feasible and will be achieved in time.

2. Restructuring the Broader Public Sector Enterprises

The Cabinet’s second major decision is about the program for the restructuring of the broader public sector enterprises. The Program is included in the Law passed and published on August 21. The program was to be specified and implemented within nine months but we have decided to do this immediately within the following few weeks, at the same time for all entities in all ministries. We are moving ahead with all the Joint Ministerial Decisions issued by the competent minister and the Minister of Finance which means proceeding with the abolition, the merger and the downsizing of state entities.

We are already proceeding with the National Radio and Television Organisation (ERT). We already have a first draft of a Joint Ministerial Decision covering all entities under the Ministry of Agricultural Development and we are moving on to regulate on other bodies: the Hellenic Public Real Estate Corporation (KED), the Corporation for the Management of Public Materials, (ODDY), the National Youth Institute, the Institute for Geological and Mining Exploitation (IGME), the National Organisation for Small and Medium-Sized Enterprises and Handicrafts (EOMMEH), the School Buildings Organisation (OSK), the merger of the Public Enterprise for the Construction of Hospital Units (DEPANOM) and the Judicial Buildings Construction Corporation (Themis Kataskevastiki). There may be other bodies and agencies not expressly mentioned for which competent Ministers have been authorised to issue the respective Joint Ministerial Decisions.
So, we are forging ahead with this immediately in order to obtain fiscal and operational benefits within 2011.

The third major decision taken by the Cabinet today is the immediate activation and extension of the labour reserve regime. If a private sector company has excess staff it can be made redundant within the stipulations of labour legislation and then the Labour Employment Organization (OAED) takes over. Within the broader state sector (General Government) we have the institution of labour reserve with the institutional guarantee of ASEP (Supreme Personnel Selection Council), which is the competent body for recruiting specialised staff assessment companies, so that Management Bodies will not individually, but through institutional guarantees of transparency and under the ultimate control of ASEP draw up a list of surplus staff. This surplus staff will be put on labour reserve.

Take note here that concerning labour reserve, the Government adopted the proposal of the main opposition party. Surplus staff means that there will be possibilities for further education and re-training. There are workers who can be transferred to another public sector organisation to be used there. There are some workers very close to retirement, so we must find a way, as per the OAED programmes, for them to prove useful for society for this period and there is a possibility for them to be used through the institution of fixed term contracts, or part-time employment according to their work profile.

Now we proceed together with the Ministry of Administrative Reform to introduce the idea of the state employee within the state sector as a whole. The employee of the state is not working for a specific Ministry or a specific legal entity but for the state in general. This is because the positions are uniform so we can reallocate staff to balance out any staff shortages or surpluses as quickly as possible to the benefit of the state and its citizens.

The next major issues is about immediate reforms in the labour market. The Minister for Labour and Social Security will shortly submit to Parliament for ratification a bill of law on social work and is proceeding with the necessary reforms in order to fully utilize the institution of the Special Firm-level Contract and will also announce the new definitive list of professions classified as heavy-duty and hazardous to health.

The biggest change in this sector is the introduction of the Single Agency for Taxes and Contributions in the Secretariat-General for Information Systems in the Ministry of Finance (KEPYO), because the National Tax System will take taxes and contributions very seriously into account. Companies which are labour-intensive providing employment to a large number of workers are to be treated differently form capital-intensive companies which do not pay major contributions.

Within this context, we are to proceed immediately with all measures to liberalise professions in order to open up opportunities and expectations to young professionals. Where there is a gap or doubt in relation to liberalising professions this gap will close in order to give hope and perspective to young people. This comes under the initiative of the Ministries of Health, Justice, Transport and any other Ministry which is competent for the liberalisation of professions.

This will be clarified by the competent ministers, but the general direction is clear and wherever there are longer deadlines enshrined in law we will expedite things. We will not wait for these deadlines which sometimes run until 2013 in order to liberalise professions.

Moving on to public administration and the general government – issues pertaining to one recruitment per 10 withdrawals, the reduction in the number of contract-holders, the use of the institution of voluntary part-time work, or voluntary non-paid leave are all to be activated and communicated to the employees and the Ministry of Administrative Reform will take all necessary initiatives to achieve the best operational and fiscal result.

5. National Taxation System

Now we are proceeding to the really big changes: The National Taxation System. Already an extremely constructive social dialogue with more than 65 entities has started. We are now at the phase of drawing up a draft law which will be the basis of national consultation.

The National Taxation System will redress injustices and imbalances. Reason will hold sway over conflict. We will reconcile the citizen with tax administration and tax administration with common sense This is where we will examine the issues of rates, but first we should agree that if there is no mechanism for collection and return of VAT, unless there are safe ways of determining the turnover and income we will be permanently locked in fierce fight between the real economy and the grey economy, between tax legality and tax evasion. If we do not have public revenues corresponding to the country’s real GDP and the actual turnover, we will never escape this financial crisis.

We will have the opportunity, in three weeks from now, to present the complete project of the new National Taxation System.

The public sector wage bill reflects the institutional change in the grading system which was drawn up by the Ministry of Administrative Reform. We have to brake a vicious circle. Years of injustice and inequality concealing a host of covert privileges will now be terminated.

The single wage bill will be truly uniform, transparent, just and based on equality and meritocracy. If a state employee has certain qualifications within a specific category he/she cannot be paid more than a colleague with the same qualifications in the same category in the same job which happens to be in another state service.

Whoever holds a position of responsibility and is effective will sign a contract of productivity. Should he/she excel, either by collecting state revenues, or in quality educational service based on a high school grading, or by drawing up many environmental studies to further investments, then of course there will be a bonus paid, there will be a productivity premium and this will reflect the result and act as an incentive.

Any change to the payroll and grading system is limited by pension expenditure due to pension legislation. The Court of Auditors will decide on legislative measures to streamline all the above and to do away with any other injustices and problems.

The personal wage difference (grandfathering) which has been so much talked about cannot be maintained. It could be maintained only as a concept of a productivity and efficiency bonus, because it’s not possible to allow someone to have a different wage treatment at random, just because he/she happened to work in one ministry and not in another. The employee who has a position of responsibility - even at a lower level, not necessarily a managerial position, but a position of responsibility with a specific project, with job specifications and a contract of effectiveness - can claim and achieve a very serious productivity bonus.

The fiscal benefit from this intervention will be substantial. We will surpass the expectations to date and this enables us to pay the productivity premium where it is due, with transparency and healthy competition prevailing, with incentives to civil servants and employees to perform well.

So, the new system has a moral as well as an operational basis, because it gives an answer to all ethical objections existing in Greek society and to injustices and inequalities that must not be reproduced and maintained. But the new system also has a very functional operational targeting in particular: we want a state that is effective, productive, serving the citizen, pushing growth and in the service of the new generation.

There are many more important decisions taken in today’s Cabinet Meeting. Fiscal Administration is of a major importance. The Commitments Register for general government agencies will commence within a few days. Any agency not declaring its commitments in the Commitments Register of the General Audit Office will no longer receive funds and will not be financed by the state. If the agency wishes to carry out its work and to pay its workers, it must fulfil its obligations to complete the Commitments Register, because only in this way can we really keep track through time of the execution of the budget and the curtailing of public expenditure.

We note here that all Public operational expenditure has been curtailed. The problem with state expenditure exists only because there is a deficit and arrears in payments from social insurance agencies due to unemployment and the drop in pay for many employees. Without this problem there would be no deficit compared with expenditure.

It is also very important for me to mention some other innovations, or, if you like, a rekindling of our decisions which have now become definitive, irreversible and immediate. For example, the changes to health expenditure, medicines, prescriptions; all these will be addressed in detail by the Minister of Health.

All Ministers participated actively in the discussion. The Government will proceed in a single and coordinated manner. Wherever new legislative amendments are needed such as for the wage bill, a single legislative act for structural changes will be passed and it will be supported by the Government unanimously at the Parliament and of course by all PASOK MPs .

But this is not enough. This is a major opportunity for all of us to join forces and show consensus. The message is that we count greatly on the structural changes. And we are sending out this very clear message to the Greek citizens, the markets, our institutional partners. It is a very clear, decisive message of absolute commitment.

Unless we ensure this leap forward, unless we break out of this vicious cycle, we will never be able to keep our heads above water. We cannot afford to continue in this spin. Now we have to move forward and we will move forward.-

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