Social security system has to find new sources of revenue in 2016

By Christina Kopsini

A report by the Labor Institute of the General Confederation of Greek Labor (GSEE) due to be presented on Monday shows that the social security system’s balance between revenues and spending will be upset as of 2016, meaning additional funding will be needed to keep the system going, Kathimerini understands.

The main findings of the report, titled “The Consequences of the Aging Population for the Greek Social Security System in 2013-50,” are that due to the falling revenues from contributions and state funding, the system’s balance will only last for another couple of years, after which additional funding of 0.5 percent of the country’s gross domestic product, or about 950 million euros, will be required.

If one adds to that amount the estimated necessary offsetting for the expected loss of 3.9 percent of contributions, amounting to 1 billion euros, it becomes clear that 2015 will be a landmark year for the pension system as it will have to find new sources of revenues.

The precise amount of the additional resources required from 2016 to 2050 due to decreased state funding will be announced on Monday, along with the size of the savings from the reduction in pensions. The plan is for state spending on social security funds to go down from 24.1 percent of GDP in 2015 to 17.4 percent in 2060.

According to the institute’s forecasts, it will take two full decades for unemployment to revert to the level where it was in 2009, the year before Greece entered the bailout agreement, provided of course that the projected growth rate of 3.5 to 4 percent every year is attained. After all, the losses incurred over the last three years have been so extreme that their effects on the pension system could hardly be covered.

The institute has found that the most important losses in the period from 2010 to 2013 have been the 18.2 percent reduction in employment, the 37-billion-euro decline in salaried workers’ revenues, the 16.3-billion-euro cut in average monthly salaries and the slashing of domestic demand by 31 percent, reverting to the level last seen as far back as in 1999, before Greece joined the Economic and Monetary Union.