- State employees face massive dismissal in wake of Greece's reform on civil service
- Protesters gathered outside parliament, calling for government to resign
- The governing coalition is committed to sacking 15,000 civil servants by the end of 2014 under the bailout terms
The Greek parliament has approved controversial reforms of the civil service and tax administration, opening the way for mass dismissals of state employees in return for a €6.8bn aid disbursement by international lenders.
The legislation was passed in the early hours of Thursday after the governing coalition secured a narrow majority in 15 separate votes on key clauses in the bill.
The centre-right New Democracy party and Pan-Hellenic Socialist Movement (Pasok) together control 155 seats out of 300, but won support from independents in several of the votes.
One Pasok legislator broke ranks, voting against the axing of the 3,500-strong municipal police force.
Protesters gathered outside parliament as voting took place, shouting anti-austerity slogans and calling for the government to resign.
Earlier, legislators from Syriza, the main leftwing opposition party, which has pledged to boost state employment if it comes to power, joined the demonstrators in a show of solidarity.
Among the protesters were teachers at vocational training institutes, school guards and municipal police officers who will be transferred to a special "mobility reserve" on reduced pay and given eight months to find another job in the public sector or face dismissal.
The governing coalition is committed to sacking 15,000 civil servants by the end of 2014 under the bailout terms. The legislation was passed hours before Wolfgang Schäuble, the German finance minister, was due in Athens on a one-day visit to show confidence and urge the government to stay the course on structural reform.
The vote came after the governing coalition made last-minute changes to the 108-clause bill to prevent defections by dissident lawmakers.
Yannis Stournaras, the finance minister, agreed to suspend payment of €80m in compensation for 2,600 workers who were sacked at the state broadcaster ERT last month, following complaints by a rightwing faction in New Democracy.
"We can't accept this level of payouts when we have cut the pensions of farmers [who receive the lowest state pension]," said Makis Voridis, a rightwing legislator.
Earlier, Antonis Samaras, prime minister, announced the EU and International Monetary Fund had agreed to a temporary cut in value added tax on restaurants, cafés and bars from 23 per cent to 13 per cent from August 1 in response to a longstanding Greek request aimed at boosting the tourist industry.
The cuts would become permanent if, as the finance ministry argues, VAT revenues show a marked improvement. "Our problems certainly haven't been resolved but . . . for the first time we've achieved some positive changes," Mr Samaras said.