Only a growth shock could save the Greek social security system: Even after the interventions of the last five years in terms of retirement age limits, pension levels, expenditure cuts and distortion corrections, which resulted in savings of some 14 billion euros per annum, the system is again ailing.
The government has declared it will immediately bring a series of measures to Parliament that are expected to have a fiscal cost of 900 million euros for this year, hurting the fragile actuarial balance of the system, while in its negotiations with the country’s creditors it appears willing to start a dialogue on new social security reforms.
At the same time the creditors’ insistence on profound changes such as the abolition of early retirements is not expected to bring about any substantial results, as the benefit to the system will not exceed 250 million euros per annum in the first couple of years, and it has been proven that funds actually benefit from early retirements in the long run.
Speaking to Kathimerini, former Labor Minister Giorgos Koutroumanis noted that with the interventions implemented to date and without the changes planned by the current administration, the Greek social security system is one of the three or four strictest in the European Union.
“The problem is not about the distortions and the waste, or the benefits and the retirement age; it is associated with the objective conditions of the domestic economy,” argued Koutroumanis. The issue is not actuarial or structural but one that pertains to cash, because as long as financial conditions in the country deteriorate, the funds will continue to suffer more pressure.
Under these conditions the social security problem remains one of the few thorns in the talks between Athens and its creditors, with the prime minister stating last week that the disagreement is of a political and not technical nature, hence the plan for a bill to avert any new cuts to pensions that will be tabled in Parliament soon.