Garganas says pension system creates poverty

The country’s social insurance system produces poverty and its function must be separated from social policy, Nicholas Garganas, the governor of the Bank of Greece, said in a speech yesterday. «It is no coincidence that one in three Greeks is poor and his/her age is mainly above 65 years,» he said. About 20 percent of Greeks live under the poverty level, according to a recent survey by the National Statistics Service. Garganas said the Greek social insurance system gave «refuge» to many repatriated ethnic Greeks in past decades, mainly from Egypt in the 1950s and 1960s and from the former Soviet Union in the 1980s and afterward. This practice, he said, exacerbated the problem, which is further intensified today by tight public finances. Garganas praised the competitiveness of the Greek Merchant Marine, which ships 80 percent of the oil transported to China. «Without receipts from shipping and oil transportation, the deficit of our external balance would have been in a dire situation,» he said. He forecast that inflation in 2005 will end at 3.5 percent and the growth rate at 3 percent. Both figures are considerable improvements from previous projections of the central bank. Garganas said weaker demand will contribute to restraining inflation. He argued that the debate on reforming the country’s social insurance system must begin from a proposal to abolish the possibility for early retirement at much younger ages. He emphasized that the pension system cannot survive without changes, but he did not intend to propose a general increase in retirement ages. The awakening of Greek society to the seriousness of the problem is a positive development, Garganas said.

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