Minister’s call for debate on reforms may not find takers

Social security reform agenda circumscribed; other issues left vague

DEMETRIS NELLAS

Economy and Finance Minister Giorgos Alogoskoufis yesterday called on opposition parties to discuss “in-depth” economic reforms.

Alogoskoufis did not specify the agenda, although he did specifically mention, approvingly, the call by the General Confederation of Greek Labor (GSEE) for talks on social security reform.

Judging from the comments of Evangelos Venizelos, a leading member of the main opposition Panhellenic Socialist Movement (PASOK), Alogoskoufis’s quest for a consensus appears doomed.

The call is “essentially an effort to elicit a social and political agreement on decisions that are not taken by all of us,” Venizelos said. He warned that his party “will not provide a basis of legitimation to a government that discovered the concept of consensus 13 months (after it took office).”

PASOK is still smarting from the government’s attempt to nullify years of economic policy through its so-called “audit” of state finances which inflated past budget deficits. The audit was partly to blame for the excessive deficit in 2004 which has prompted the government to raise indirect taxes in order to fulfill its commitment to the European Union to lower the deficit to acceptable levels by next year.

In these circumstances, PASOK is in no mood for consensus. It is expected to remind Alogoskoufis that, so far, the government has made the major economic decisions all by itself. Regardless of whether the audit was justified or not, the result was more trouble for Greece. In this respect, Alogoskoufis is not in a position to seek consensus and his vagueness as to the agenda indicates that this is partly a political ploy made in order for the government to blame its opponents for their likely non-cooperation.

There are, however, economic policy issues that have nothing to do with the deficit and that call for long-term solutions. Social security is one of them. Alogoskoufis correctly pointed out that at least some within PASOK are in favor of reopening the issue of social security, supposedly settled by the previous PASOK government in 2002 with a law that, as both ministers and unionists underscored at the time, had assured the financing of the system for the next 30 years.

Now, GSEE President Christos Polyzogopoulos, a high-ranking PASOK member, acknowledges that the Social Security Foundation (IKA) is in danger of financial collapse within 20 years. This is an about-face from his previous line that the issue had been settled.

When the previous government had presented a first reform proposal for social security, New Democracy, as well as left-wing parties, had made common cause with Polyzogopoulos in attacking its provisions, which included a rise in the retirement age. The massive reaction resulted in the adoption of a watered-down version.

Yesterday both Alogoskoufis and Deputy Labor Minister Nikos Angelopoulos said that increasing the retirement age or cutting pensions are out of the question. This leaves more financing of social security as an option. Since employers are hardly going to agree to raise their contributions, the only option is the state budget. This may be welcomed by the unions, but such an option goes both against the government’s commitments to the EU and its own spending-cut priorities. Which makes one wonder what reforms Alogoskoufis has in mind.