ECONOMY

SEV calls for reforms now

The government will have to tackle social security reform before the end of its four-year term, top officials of the Federation of Greek Industries (SEV) said yesterday. Although SEV Chairman and Executive President Odysseas Kyriakopoulos stressed the need for reform through consensus, the General Confederation of Greek Labor (GSEE), the top-level union representing all employees except civil servants, declared it would oppose any attempt at reform and attacked SEV. SEV officials also made proposals designed to maximize the growth potential created by the Olympic Games and reiterated their opposition to early elections. Taking account of the declaration of Prime Minister Costas Karamanlis’s declaration, last Saturday, at the Thessaloniki International Fair, that his government will implement the mild reforms enacted by the previous government in 2002, Kyriakopoulos said that social security reform «is not an issue that must be tackled tomorrow» but all his other statements implied the opposite. The reforms passed by the previous Socialist government committed the State to financing social security through the budget, in addition to employer and employee contributions. The 2002 law represents a significant retreat from original proposals that would extend the number of years in employment required for full pensions and encourage employees to turn to private insurance schemes to supplement declining pensions. Commenting on Karamanlis’s stance, Kyriakopoulos said: «The government made its own choice and said they will not deal with social security, at least initially. Nowhere in the government’s (election) program was there a mention of social security and certainly not for the first or second year (of its term). I don’t think it can avoid the issue during its four-year term. That would be rather irresponsible.» Kyriakopoulos added that the viability of the social security system is a very serious issue and the longer one refused to tackle it, the more serious it would get. He was careful to underline, though, that any reform can only succeed if all parties involved – the government, employers and unions – agree. That is why any approach toward reform should begin by stating what the problem is and that reform proposals should come at a later stage. «I think the government will inevitably open the discussion. Our own proposal is to focus on describing the problem and on agreeing what the problem is and not to begin by submitting proposals that will pit one side against the other. I believe if we agree on the causes, we can find a solution easily,» Kyriakopoulos said. Union warning Though it was expressed in such a careful way, Kyriakopoulos’s proposal drew a sharp response from GSEE, which called it «an indication of displeasure» with Karamanlis’s commitment to following the existing law and «supporting and funding the social security system… in order to ensure its viability.» «This development did not satisfy SEV, which, taking advantage of the presence of the (International Monetary Fund) experts… opened this crucial issue, appearing as the IMF’s obedient students,» GSEE said. The union warned that it will «fight and contest any effort to take back social security rights» and called on SEV to contribute to social cohesion by making its members pay the «billions of euros» of social security contributions owed to pension funds. IMF experts, who concluded their examination of Greece’s economy last week, said that finding ways to finance social security is an urgent priority and that the system might find it difficult to pay pensions after 2010. When it enacted its reform, the Socialist government had claimed that the financing of the system was assured at least until 2032. Economic priorities Kyriakopoulos said that the immediate priorities for the government are to reform the taxation system and provide investment incentives via a new «Development Law.» He added that Karamanlis’s references to economic policy in Thessaloniki are in line with the expectations of the business community, but added that SEV expects concrete measures in the 2005 budget, which will be unveiled in November. «The prime minister outlined the priorities and gave general directions… Now is the time for concrete action by all ministries,» the SEV chief said. SEV Vice President Dimitris Daskalopoulos said the government should not contemplate new elections in the spring, on the occasion of the election of the next president of the Hellenic Republic. Elections will take place if Parliament fails to elect a president with a three-fifths majority after three votes. Some government officials have hinted that Karamanlis, whose New Democracy party does not have the votes to elect a president by itself, may force an election by presenting a candidate unacceptable to the opposition in order to renew his mandate. «Anything that acts as a break in growth and competitiveness would be better avoided,» Daskalopoulos said, reflecting the view among business circles that election campaigns delay the implementation of necessary but probably unpopular economic policies. Post-Olympic actions SEV officials also made proposals for getting the most out of hosting the Olympics. The proposals include upgrading the infrastructure and functioning of major cities, developing the tourism industry, expanding the range of products and services and making good use, and fast, of the several new Olympic venues. They said that the Greek economy has shown in the recent past, with the successful bidding for the Olympics and the country’s entry into the eurozone, that it can achieve difficult goals by setting clear targets, following strict timetables and through the effective cooperation of the private and public sectors. According to SEV, the Olympics offered the opportunity to many companies, especially the sponsors, to become known abroad. They, in turn, should take advantage of this to expand partnerships with foreign firms.