BUSINESS

Gradual or partial pension cuts on the cards

EIRINI CHRYSOLORA, ELENI VARVITSIOTIS

TAGS: Finance

Athens and its creditors are seeking a compromise solution over the issue of pension cuts, a well-informed European source has revealed to Kathimerini, while eurozone officials say the debate on the cuts remains open following Friday’s Euro Working Group.

The solution being discussed provides for a combination of measures including the partial or gradual reduction of pensions issued before 2016 in exchange for the gradual reduction of the tax-free ceiling from 2019, and not from 2020 as planned.

The eurozone has made it clear that there is not enough fiscal space for the pension cuts, the offsetting measures announced – such as the reduction of the Single Property Tax (ENFIA) and social security contributions – and a rent subsidy.

At the same time, changes the government is planning on the labor front – collective contracts, a minimum wage – combined with new demands such as the protection of all main residences from confiscation are sending a very strong message that the country is attempting to undo reforms. This is likely to keep Greece locked out of the markets, drive any potential investors away and pave the way for a new bailout loan agreement.

The discussion on the pension cuts continues, eurozone officials told Kathimerini. While the position of the European Commission was particularly favorable at Friday’s EWG meeting on the non-application of the cuts, three member-states expressed doubt over whether skipping the reduction would be feasible.

Germany and Finland stressed that their decision will need the approval of their national parliaments. Although the German position as expressed by Berlin’s State Secretary for Finance Joerg Kukies was not as tough as some people had expected (he and his minister Olaf Scholz belong to the Social Democratic Party, which has a softer position on Greece), the question is what the Bundestag will decide.

The Slovak representative at the EWG was the only one who clearly expressed doubt over the nonimplementation of the pension cuts.

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