ECONOMY

Social security can be reformed

The appointment of Nikos Angelopoulos as deputy minister for labor and social security came as a surprise to many journalists who did not know him personally. However, he has since convinced even the most doubtful with his in-depth knowledge of the issues he handles. Angelopoulos was the first unionist affiliated to New Democracy to be elected president of a large union, OTOE, the bank employees’ union, by common consent. His appeal reaches unionists in all sectors, which may be crucial as the issue of social security is about to be broached again. What is the issue at hand with social security? To secure the same rights we have today for the next generations. Unfortunately, figures from funds and the actuarial study made recently by the General Confederation of Greek Labor (GSEE) do not allow for optimism; they are nightmarish. If we consider that the actuarial deficit of all social security funds is estimated at 200-265 billion euros, no one can reject any proposal for dialogue. How do you rate the GSEE proposal? This is a good conjuncture, as it comes from the main union, following warnings from the International Monetary Fund, the Organization for Economic Cooperation and Development, and the Bank of Greece. Of course, we did not need all this to realize the problem. What do you expect from the coming dialogue? It should be extensive, without time limits or predetermined issues. All sides must show real will to solve the problems. After all, it is the GSEE study that highlighted them. Many people worry the dialogue will be ostensive and that cuts in provisions are coming… We must combine various parameters. We do not need any huge reversals, and such is the view of many others also. We do not need to change the basic age limits for full retirement as defined by the 1992 and 2002 laws. There is a series of other problems we could deal with. If we manage to make efficient decisions on contribution evasion, employment, utilization of the funds’ properties and the high cost of managing the system, then we might avoid any intervention that would generate intense reaction from employees. I believe the social security periods and the age limits are enough to safeguard the system’s viability. Aren’t there any problems needing immediate solutions? We must look into extreme cases, system contortions, injustices and regulations that create a lack of awareness of the value of social security. The system cannot, as GSEE notes, have pensioners aged under 50 or just over. We also have phenomena of buying the last 150 social security credits in the black market. This madness shows that for some categories, the more uninsured years they have, the bigger the pension is. These problems cannot only be handled through penalties. We cannot place a police officer next to every contribution-evading entrepreneur. Controls must be preventative. What is most important, and missing, is the social security conscience and the formation of a system that provides benefits in proportion to one’s contributions. Figures regarding the evasion of social security contributions are impressive. Recently, the federation of social security funds’ personnel announced that the revenues lost exceeded 4 billion euros. Will you wait for the dialogue to take measures on this problem? Certainly not. We are now ready to pass a regulation for the creation of a Social Security Funds Inspectors Corps. Nowadays, typically, Social Security Foundation (IKA) inspectors pay visits to employers who claim they contribute to another fund. Why is it so hard to have a sober discussion on the problem? It is a question of mentality. For years, the cultivated thinking was that it is bad for political parties to discuss and agree on big issues, but we will get over that, as we did with taboos over the dialogue of social partners. Big issues have to be discussed. Otherwise how will we achieve the consent required? Are the needs of enterprises for voluntary retirement programs compatible with the viability of funds? Every enterprise has an inalienable right to improve its finances via its balance sheets. Yet the costs of modernizing a company cannot be passed on to the social security funds. The GSEE study may say the viability of the system is not affected by the retirement age, but this is not so clear-cut. Everything plays a part, some more than others. For instance [state telecom] OTE or banks should not pass on their obligations to IKA. We agree with GSEE on this point. Would you personally like to leave your mark in the ministry with the reform of the social security system? The question for an ambitious politician is how to make the system more effective with the same money, how to improve the services to citizens. We can make reforms without dramatic changes as the money paid into funds is not little. This year, we received 4.5 percent of gross domestic product in total as a grant for all social security bodies, that is some 8.5 to 9.5 billion euros. Do not forget that social security receives 12.6 percent of GDP. For years, you worked at Emporiki Bank and know its social security problem from inside. Can there be a solution? Emporiki’s problem is great indeed. Its fund is the outcome of a strong contract between the bank and its employees, it has no legal form, so it is not covered by the 2002 law for inclusion in IKA. Therefore, any solution can only be found through a bilateral agreement. It has an immense actuarial deficit which, if presented in the balance sheet according to International Financial Reporting Standards, I am afraid it will demote the bank’s net worth in the market. We all hope this does not happen and a solution is found by both parties. After all, both the state and the bank share a part of the cost. It would not be painful for employees themselves to agree to modify some extreme clauses in their charter. For months OTOE and banks have sought a unified solution. Is an agreement possible? We all want a single solution, but it is hard as each bank is different. As I play no part in this effort, I am not entirely sure all sides intend to solve the problem. Issues posed by OTOE are too hard to be accepted by the banks or the government. Such a case is their demand for the abolition of clauses for new employees defined by the 1992 law. Even PASOK governments preserved that. Their abolition would open a Pandora’s box, as other employees would call for similar favorable clauses for those insured after January 1, 1993. It is understandable for anyone to want a system to remain as it has been for many years. But it is very hard to adopt the extension of such clauses to employees who were not until today covered by them, in a period with so many problems. The merging of the banks’ special funds with IKA creates an actuarial deficit of around 10 billion euros. Who will pay it? The state budget? The enterprises? And what will the employees contribute along the trilateral funding? When we enter a dialogue with each side fortified behind issues it considers sacred, talks can go nowhere. Do you foresee a failure? We see that this dialogue has suffered several times. There are deadlines set all the time and they are always missed. I am not optimistic. I know this domain and my colleagues and I see that bankers want to solve their structural problems by passing on costs to the state budget or the employees. I worry. We shall wait.