ECONOMY

Proof of pension reform lies in implementation

A few days ago, the Social Security Foundation (IKA) was renamed the IKA-Unified Workers’ Insurance Fund (ETAM); this was the first, and likely only, painless application of the provisions of social insurance reform law 3029, voted by Parliament last summer. The difficulties are about to begin now, as social insurance remains one of the potentially most dangerous factors for the country’s public debt in the short term. The most important difficulty is determining the real substance behind the renaming of IKA, that is, the incorporation into it, through merger or absorption, of the eight funds that are considered least problematic. They concern workers of OTE Telecom, the ISAP Athens trolley bus company, National Bank, Agricultural Bank, the former Ionian Bank (now part of Alpha), ETBA Bank, agricultural and cooperative organizations and of Ethniki General Insurance company. The pension branches of these funds must be incorporated into IKA-ETAM by January 1, 2008. However, this five-year period may prove inadequate in achieving the organizational and functional restructuring of the funds, particularly as regards bringing into line the contributions of employees and employers with those of IKA-ETAM. Apart from this, the government is going to find it quite a complex endeavor to meet its obligation, according to the law and in view of existing fiscal constraints, to cover their operating deficits. The most important difficulty for the application of the merger provisions emanates from the law itself, which sets as a precondition the agreement of the boards of the funds themselves – which include workers’ representatives – for bringing their contributions into line. This precondition last year proved instrumental in securing the consent of the unions for the reform law. And in line with the letter of the law, Deputy Labor and Social Security Minister Rovertos Spyropoulos has now asked the eight boards to adopt the relevant decisions as soon as possible. The question now is how willing the boards are to adopt such decisions; already, the board of Ethniki General Insurance pension fund, where employees’ representatives – affiliated to three opposition parties and recently elected under a single ticket – hold the majority (three out of five), has adopted a negative decision. In OTE’s pension fund, the issue will be the subject of a special assembly. Another issue needing clarity is the future of the Unified Auxiliary Fund (ETEAM), the launching date of which has been set as June 1, 2003, but a period of at least two years has been provided for the drawing up of the regulation determining benefits and contributions, after an actuarial report. Several other points in the law also remain unclear. One of these concerns the criteria to be used in the redetermination of occupations deemed hazardous to health. The law sets a deadline at December 31, 2004, effectively referring the issue to the next government. Bank employees In the background of such uncertainties, the only intensive deliberations concern the incorporation of bank employees’ funds into IKA-ETAM and the merging of their auxiliaries. According to Labor Ministry sources, there is a considerable amount of convergence among the funds, and the Economy Ministry is expected to make a decisive move soon toward securing a viable solution to the actuarial deficits of certain large funds. Such progress in consultations is linked with scenarios about the merger of two large banking groups. Indeed, unionists go as far as to link such scenarios with the serious actuarial problems of the pension fund of a large banking group whose real financial situation is said to be a «closely guarded secret.» In any case, banks are seen as anxious to reach solutions that may trigger broader changes in social insurance funds.