Following the decision of the Council of the State, Greece’s highest administrative court, that the wage cuts imposed on members of the armed forces and emergency services in 2012 were unconstitutional and should be fully reimbursed, the Greek government fears that this decision would eradicate this year’s budget and that other groups of civil servants would claim a return of the withheld salaries.
If the measure of reimbursement is officially adopted, the Greek government would have to seek fiscal equivalents, as the cost to the budget would amount to 1 billion euros, o.5% 0f Greece’s GDP.
“It’s an additional headache, even though we’ve outperformed budget targets for 2013 . . . We’ll do it if we’re obliged to but we will have to find fiscal equivalents on a permanent basis,” reported Christos Staikouras, Greek Deputy Finance Minister to Financial Times. Staikouras reported that it is still unclear whether the court’s decision would also apply to other employees in the same salary grid as university teachers.
In 2013, Greece had achieved a primary surplus that amounted to more that 800 million euros. This was a sign that after 6 years of recession, the Greek economy was finally recovering and that the austerity measures and wage cuts were effective. Moreover, it proved that the Greek government succeeded in meeting the fiscal targets set by its EU creditors and the International Monetary Fund.
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