Following a meeting with Prime Minister Antonis Samaras, the leader of Democratic Left, Fotis Kouvelis, who appears against increasing the retirement age to 67 and layoffs in the civil service argued: “No measures can be imposed on a society that is disintegrating,” he said.

PASOK leader Evangelos Venizelos argued that Greece’s labour market rules must be the same as in the rest of Europe. He reiterated his demand for Greece’s fiscal adjustment period to be extended by two years, Kathimerini writes. On the other hand, he appeared optimistic: “There is small progress every day,” he said. “My experience tells me that we will reach a comprehensive agreement.”

Meanwhile, talks with troika head representatives continue. Finance minister Yannis Stournaras and the troika heads met yesterday afternoon aim at drafting around EUR 9-10 billion worth of measures from the total EUR 11.9 billion package, protothema.gr writes. The government aims to overcome the objections of the auditors, however the latter seem persistent in rejecting around EUR 2-2.5 billion of measures. According to the initial plan, Stournaras is about to present the list of measures to the Eurogroup tomorrow in Nicosia.

According to information even if there are legal issues the Troika sees that the public sector will not be able to withstand the increased pension costs of tens of thousands of employees who massively apply to guarantee their pension from now. Something similar applies to private sector employees who exercise their right to a pension because they cannot find work. From these discussions, it appears that the Troika favors a legal response to the phenomenon, which will hit those who hastily enter retirement from now, so as not to leave them without income as retired “reservists” of the public sector in the coming years. The same information mentions that even the private sector could not support the hordes of unpaid pensioners that will seek employment and income in the market.

According to ANA, troika officials informed the government that they accepted EUR 5.5 billion of proposed measures, but required clarification on EUR 3.5 billion’ worth of proposals. They deemed the remaining EUR 2.5 billion’ worth of measures as unacceptable. The lenders demanded that the new austerity package allow for public-sector layoffs, a policy the coalition parties reject. They also reject the proposed savings of EUR 517 million in the defence budget, pointing out that the measure simply involves the government postponing EUR 437 million of expenditure until 2015. Troika inspectors also doubt the feasibility of cutting EUR 735 million from the local government budget and EUR 1.4 billion from pharmaceutical spending.

Meanwhile, in a policy paper, Democratic Left party proposed some EUR 1.23 billion in alternative cutbacks in defense, health and energy sector outlays, so as to avoid slashing pensions and other benefits. Greece should avoid across-the-board cuts in bonus payments to pensioners and raising the retirement age, the party said, Capital.gr writes.

According to the paper, savings in defense could be secured through the reorganization and the deferment of procurement spending into the future, health sector savings through more efficient procurement practices, and the reduction in subsidies to certain energy producers.

Addressing the cabinet, which convened to discuss the austerity package, Samaras said the government was determined to push growth measures, such as privatizations, structural reforms and boosting investments.

“If we only focus on the cuts, without any growth measures, we are at risk of the recession spreading to eight years, which would result in economic output having contracted by 30%,” the prime minister reportedly said.

Maanwhile, cabinet formally approved the package of EUR 11.7 billion in spending cuts, that includes drastic cuts to salaries and subsidies in public utilities, ending holiday payments for all pensioners and increases in public transport fares. The list will then receive a final sign-off today by the coalition leaders.

According to media reports, EUR 4.6 billion are earmarked from reduced pensions, EUR 1.39 billion from health, EUR 1.32 billion from state salaries and EUR 1.27 billion from administrative costs. Also, public-sector wage expenditure will be cut by EUR 3.3 billion by applying a 12% cut to the special salaries enjoyed by certain categories of civil servant, resulting in savings of EUR 360 million, while another EUR 339 million will come from cutting what remains from 13th and 14th salaries. In addition, the unified pay scale for all civil servants will be introduced a year earlier than planned, which will result in EUR 120 million euros in savings.

EUR 274 million in savings over the next two years will come from cuts in the salaries of 68,000 employees in public utilities companies by 30% savings, along with a reduction in state subsidies to these companies. Labour reserve scheme would save EUR 167 million and freeze on all promotions in the military and police will save EUR 165 million.

According to protothema.gr, the troika’s technical team has expressed serious concerns as regards the effectiveness of measures EUR 1.4 billion included in the austerity package. For instance, troika specialists have questioned the government’s ability to reduce pharmaceutical expenditure even further (EUR 450 million), given EOPYY’s debts towards the private sector have already skyrocketed. Also, EUR 500 million in defence cuts seem problematic to them, due to strict terms and conditions included in defence contracts. Further, they say that further cuts in operational expenses in the public sector is a measure they keep hearing too often by the Greek government but no results were ever produced (EUR 500 million). At the same time, private sector’s receivables from the state have reached EUR 7 billion. Finally, the troika’s technical team asked to exclude the forecast of EUR 2 billion revenues from battling tax evasion.