Extra cuts set for auxiliary pensions from bailout agreement’s drafts

Extra cuts set for auxiliary pensions from bailout agreement’s drafts

The draft memorandums of understanding submitted to the Finance Ministry on Monday by the European Commission and the International Monetary Fund provide for the possibility of cuts to supplementary pensions from 2019, the lifting of regulations on Sunday trading, the abolition of the Labor Ministry’s veto on group layoffs and the extension of the collective labor negotiations’ suspension until the end of the bailout program, in the summer of 2018.

The two draft MoUs constitute the basis for the negotiations starting today, with the aim of completing the agreement by May 22. They confirm the imposition of pension cuts equal to 1 percent of gross domestic product in 2019, coming from the leveling down of main pensions issued before 2016 to the amount calculated according to last year’s legislation. But if this does not suffice to meet the 1 percent of GDP target, there will be extra cuts to supplementary pensions too.

The drafts make no mention of what will happen to collective labor negotiations after the expiry of the bailout program in August 2018, but they do stress that the use of lignite by Public Power Corporation must drop to 40 percent of its output.

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