ECONOMY

Exact number of pensioners still unknown to government

The so-called «social budget» (expenditure on pensions and welfare programs) presented yesterday by Labor Minister Dimitris Reppas suffers from the same fuzzy data that has dogged previous budgets. After a series of studies on the social security system, we still do not know the exact number of pensioners, because many receive pensions from more than one social security fund. There are also many questions surrounding the finances of the funds themselves which, according to the government, show both an operating surplus and a big rise in assets despite a precipitous decline in the value of their shareholdings. Reppas admitted the problem concerning the number of pensioners but claimed that it would be resolved soon. In presenting the social budget, Reppas said that social spending has risen steadily over the past two decades, from 13.98 percent of the country’s gross domestic product (GDP) in 1980 to 18.49 percent in 1993 and to 22.1 percent this year. If one uses the wider definition of social spending used by the European Union, Reppas said, it rises to 27.7 percent of GDP, slightly higher than the EU average of 27.5 percent. The data show that there is one pensioner for every 1.51 actively employed persons, up from 1 to 2.46 in 1990. Because the currently employed actually pay for the pensioners’ income, this reflects a very grave situation, graver than even in other parts of Europe, where the rising average age of the population has boosted the number of pensioners. Reppas said the problem was not as grave as it first appears, because a number of people appeared on the rolls of pensioners more than once, especially in the farmers’ pension fund. If we corrected for this, he said, the actual ratio of pensioners to employed is 1 to 1.81. Furthermore, Reppas said, and despite the pressure of demographics, government measures will succeed in putting more people among the actively employed (Greece has the second lowest percentage of people of working age in the workforce, ahead of Italy). This, Reppas explained, will help change the ratio to 1 pensioner for every 2 persons employed next year and to 1 to 3 by 2015. At first, the government’s explanations appear logical, as is the contention, often repeated by Economy and Finance Minister Nikos Christodoulakis, that partly financing social security through the budget will keep the system solvent until 2032. But, given the fact that the government does not even know the actual number of pensioners, it is right to assume that they are operating under the most optimistic assumptions. In 2002, according to the budget data, the total assets of the social security funds rose 8.70 percent, to 18.12 billion euros. This despite a 41.4 percent decline in the value of their shareholdings, to 1.76 billion euros. Of course, this value is nowhere near the 1999 level (5.2 billion euros) when the Athens Stock Exchange was experiencing a boom year. According to the data presented, the decline in shareholdings was more than compensated for by bonds (7.03 billion euros in 2002 versus 5.7 billion in 2001), mutual fund shares and share-exchangeable certificates. Also, the funds’ total revenues for 2002 (22.253 billion euros) exceeded expenditure (21.159 billion).