Greek pensions said to be in creditor crosshairs as talks renew

Greece’s creditors are making pension reforms a top priority, leaving the door open to compromises on other issues like the country’s minimum wage proposals.

Greek negotiators are meeting Wednesday with the so-called Brussels Group as efforts continue to reach a deal by month-end, according to two officials close to the talks.

If Prime Minister Alexis Tsipras can offer sufficient pledges to overhaul Greece’s retirement program — one of the nation’s biggest hurdles to qualifying for International Monetary Fund aid — creditors might offer leniency on their demands to restrict increases to the minimum wage, according to another official, who asked not to be identified because the talks are private.

“The pension system looks unsustainable and needs reform,” said Guntram Wolff, director of the Brussels-based Bruegel group. “If you don’t reform it and want debt relief, you’re essentially asking your partners to fund an unsustainable pension system.”

The debate over pensions, wages and other contentious points delves into details as some European policy makers strike a more optimistic tone that a deal to unlock bailout aid can be reached. An agreement is possible in the coming weeks, EU Economic Commissioner Pierre Moscovici told the French Senate Wednesday, the day after German Chancellor Angela Merkel said Greece had until the end of the month to reach a resolution.

Wage Demands

Creditors, represented by the IMF, the European Commission and the European Central Bank, won’t accept raising the Greek minimum wage back to its pre-2012 level, according to one of the officials. At the same time, they might be open to a more gradual increase that takes into account the impact of higher wage requirements on unemployment and the overall economy, the official said.

A Greek government spokesman couldn’t immediately be reached for comment. Spokespeople for the IMF and the European Commission said Tuesday that they don’t comment on specifics of the talks.

An acceptable deal with Greece may comprise as little as a third of the country’s previous commitments for economic policy changes, according to a German government official who asked not to be identified. A second German official said an agreement that rolls back minimum-wage pledges would wipe out about three quarters of what the Greeks had initially promised to deliver.

Taken together, the comments suggest a minimum-wage compromise is not ruled out if there is no other alternative. The officials reiterated Germany’s view that Greece needs to live up to its bailout promises if it wants to get the rest of its money owed under the program.

Tax Reform

Tsipras also has indicated he’ll submit a new proposal on sales-tax reform in the coming days after an original offer didn’t pass muster, people familiar with the matter said Tuesday. The Greek prime minister will have a chance to unveil his latest plans for Greece’s debt when he sees his fellow EU leaders at a May 21-22 summit in Riga, Latvia.

At that summit, Tsipras will lay out a new plan to get Greece’s finance back on track, according to a person familiar with the negotiating position.

Greece now aims for a two-stage pact with its creditors: first, a deal now to unlock liquidity for the economy; second, a comprehensive, long-term agreement this fall, which will secure the country’s financing and debt restructuring, the person said. Tsipras has told Greek lawmakers that his government and creditors are converging on primary budget surplus targets, the person said.

The commission is working “to help Greece in rebuilding its economy and stimulating growth and fighting against unemployment,” spokeswoman Mina Andreeva told reporters in Brussels on Wednesday.

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