Social security reform too shallow

Government will not raise retirement age, nor contributions, leaves long-term solution for the future

The government yesterday presented a proposal for funding the social security system without, essentially, committing new resources, giving the impression that the much-trumpeted «reform» of the system will be an exercise in creative accounting without long-lasting effects.

To offset the impression of a «shallow» reform, the government placed emphasis on the fact that pensioners will be better off than with the previous reform proposal, passed by a conservative government a decade ago. Sources inside yesterday's joint meeting of the Inner Cabinet and the Executive Bureau of the ruling Panhellenic Socialist Movement (PASOK) said that most of the meeting was spent on how to sell the proposal to the public.

Prime Minister Costas Simitis, making a statement to reporters after the meeting, set the tone by emphasizing that «the issue of social security is not just a fiscal problem, a matter of money. It is, above all, a social issue... The reform of the social security system is a central element of our policy for an upgraded social (welfare) state.»

With these words, Simitis set the tone for the confrontation with the opposition New Democracy party. He, and the other PASOK officials, will accuse the conservative opposition of disdain for the lot of the people, while also making sure that, in case ND wins the next elections - the likeliest outcome at this moment - it will be saddled with the issue.

Simitis said that, by restructuring the Social Security Foundation (IKA), the largest pension and health fund, the revamped social security system will require no increase in either employer or employee contributions and no raising of the retirement age. People who have worked for a total of 37 years may retire at any age. People will also be encouraged to work past retirement age and more benefits will be provided to working mothers.

«Our decision calls for a five-year transition period. This transition period will begin in 2007... There will be no change for those retiring until then,» Simitis added.

When the dust settles from all the complex debt-swapping arrangements, it is evident that the government is only prepared to commit an extra 176 million euros annually to IKA. This is a far cry from the unions' demand for a minimum 1.47 billion euros, and preferably 2.35 billion, the unions want the state to commit each year.Except for Christos Polyzogopoulos, head of the General Confederation of Greek Unions (GSEE), who declared that «the issue of financing (the system) is open, but not closed,» the rest were scathing. Conservative unionist Yiannis Manolis, GSEE's general secretary, said that the government is mocking the working people. Alekos Kalyvis, a unionist and member of the Left Coalition, said that the proposals were a «combination of alchemy and offers of leftovers.»

New Democracy's Giorgos Souflias said that «the country does not have a serious government» and accused Simitis of «trying to postpone a (viable solution) for the future.»

Even PASOK heavyweights had their reservations, which they expressed privately, at yesterday's meeting. Environment and Public Works Minister Vasso Papandreou wondered how the government could explain the difference between last year's proposals, which called for more radical reforms and were later hastily withdrawn, and Health Minister Alekos Papadopoulos said he worried about the proposals' impact on the national debt.