Gov. Paterson has struck a deal with state labor unions that will avoid lay offs for 7,000 employees in return for a modicum of pension reform.

He says this will save taxpayers $440 million over the next two years — and $30 billion over the next 30.

Hold the applause, please.

For one thing, the agreement with the Civil Service Employee Association (CSEA) and the Public Employees Federation (PEF) provides for a $20,000 severance sweetener to some 4,500 workers whose jobs were to be abolished anyway.

Total cost: $90 million-plus.

Whence the cash?

Moreover, as E.J. McMahon of the Manhattan Institute notes, the new tier still provides benefits far more generous than anything available in the private sector.

Even the reduction of 7,000 jobs — those who get the one-time sweetener and another 2,500 positions that currently are vacant and will be abolished — brings the bloated state payroll only down to its 2004 staffing levels.

And workers who remain in their jobs get to keep the 3 percent pay hikes they negotiated for the coming year.

Recall that Paterson first threatened those layoffs back in March unless the unions agreed to forgo their raises — just as private-sector workers, whose taxes pay public salaries, have had to do across the country.

Indeed, many workers have taken pay and benefit cuts just to keep their jobs.

But New York’s public-employee unions apparently don’t believe there’s a recession — or that it applies to them.

They fought back with vile invective and a series of TV spots blasting the governor. End result: Paterson caves.

Perhaps the creation of a new pension tier, which the unions endorsed, will result in some modest savings.

But, contrary to Paterson’s “pop the champagne corks” announcement, there’s far less here than there should be.

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