The Greek cabinet approved on Sunday a first round of mass layoff in the public sector in the context of efforts to address an acute debt crisis, as the 2012 draft budget unveiled in parallel showed that the debt-ridden country will miss the deficit targets until 2013.

During a marathon cabinet meeting chaired by Greek Prime Minister George Papandreou it was decided that by year end 2011 under a labor reserve program up to 30,000 Greek civil servants will be placed on partial pay of 60 percent of their current monthly wage for 12 months before becoming redundant.

The target is to gradually reduce the number of employees at the overburdened public sector and consequently state spending over the next two years and meet fiscal and development goals agreed with EU/IMF lenders in 2010 under a wider three-year austerity and reform plan to slash deficits and restore the growth of the ailing Greek economy.

Greek Prime Minister George Papandreou (Front) walks to attend a cabinet meeting, Oct. 2, 2011. [Xinhua]

"The government opted for the option with the milder possible social impact that still meets in full our commitments to foreign lenders," explained the Greek government spokesman Elias Mossialos in a statement released after the end of the cabinet meeting, stressing that Greece will save about 300 million euros (401.64 million U.S. dollars) from the labor reserve program.

According to the plan, the 30,000 employees affected will be above 60 years old and very close to retirement age, so that "the labor reserve will not lead to the insecurity of unemployement, but the security of pension."

Protesters demonstrating outside the parliament building on Sunday against austerity, and labor unions planning a first nationwide general strike on Oct. 5, argue that the plan opens the way to mass dismissals of civil servants who under the Greek Constitution had secured job positions for life.

"We are not willing to make any more sacrifices for a debt crisis others created and mismanaged," chanted demonstrators, as the cabinet also approved the 2012 draft budget that showed that Greece is on course to miss the 2011-2012 deficit targets agreed with EU/IMF creditors.

According to the latest official figures, "due to deeper than expected recession," the Greek budget deficit will stand at 8.5 percent of GDP in 2011 instead of the 7.6 percent initial goal agreed with creditors.

In 2012 the deficit is expected to be slashed to 6.8 percent of GDP instead of the 6.5 percent initial target under the condition that a 6.6 billion euros (8.83 billion U.S. dollars) worth supplementary austerity and reform measures package will be implemented in full by 2013, as Greek officials warned.

According to local analysts, the Greek cabinet's latest steps that come after a new round of deliberations with EU/IMF inspectors in Athens since Wednesday, could pave the way for the disbursement this month of the sixth tranche of a multi-billion euro rescue package initially granted to Greece last year to stave off default.

Without the 8 billion euros (10.71 billion dollars) tranche, the eurozone member country could go bankrupt by this November with major repercussions for Europe and the world.