Impact of ‘social package’ on taxes worries employers

The government is finalizing the so-called «social package,» a number of measures that will cost at least 1.3 billion euros and which are the government’s best hope to reverse opposition New Democracy’s consistent lead at the polls before the national elections. Elections must take place by May 2004, at the latest, but Prime Minister Costas Simitis may decide to advance the date. Simitis is set to announce, in 10 days’ time, the government’s economic policy for the new year in a keynote speech at the opening of the Thessaloniki International Fair. He is still working on the package, which will probably be finalized today at a meeting with Economy and Finance Minister Nikos Christodoulakis and Michalis Chrysochoidis, general secretary of the ruling Panhellenic Socialist Movement (PASOK). Business representatives have reacted strongly against any notion of pre-election handouts. They are afraid that any loosening of fiscal policy will be compensated by the imposition of new taxes. The chairman of the Federation of Greek Industries (SEV), Odysseas Kyriakopoulos, will meet with Simitis at noon today and is expected to voice these objections quite strongly. He did so yesterday in a radio interview, extending his warning to New Democracy, saying its members should not create a climate of expectations with promises they cannot honor. According to government sources, this package of measures to help people of lower incomes may, in the end, exceed 1.5 billion euros. Plan specifics Government plans for the «social package» include a rise in farmers’ pensions and the special bonus given to people of low incomes, measures to find jobs to long-term jobless, pay rises for civil servants and special hirings at public utilities. Farmers’ pensions will rise in two installments, from 170 to 205 and then 235 euros per month. This measure will cost 200 million euros and affect 800,000 pension recipients. The so-called «Social Solidarity Bonus,» awarded to over 350,000 poor people, will rise significantly. This would fulfill a promise from the previous elections. This will cost at least 220 million euros. Measures to employ the long-term jobless and to provide assistance to poor students through interest-free loans will cost another 250 million euros. Pay rises to civil servants will be up to 6.5 percent, well above the inflation rate. This will cost at least 630 million euros. Pay rises to army officers, university professors, judges and doctors working in the National Health Service will range between 5 and 5.5 percent. About 8,000 jobless will be hired to work on big infrastructure projects, where the majority of the employees are currently economic migrants who are paid very little. This measure, which will be applied until August next year, will cost 41 million euros.