ECONOMY

Labor unions snub gov’t on pension reform effort

Labor unions yesterday threw cold water on government hopes they would participate in the dialogue on social insurance reform which starts in Parliament today. General Confederation of Greek Labor (GSEE) President Yiannis Panagopoulos told a press briefing that the government had failed to respond on the major issue of its arrears to pension funds – the «lynchpin» of the matter – or provide any relevant data. «As long as the problem of state debts is not tackled, the system’s viability and ability to address social requirements will be in doubt,» he said. «If the government does not make a committed proposal on this issue, dialogue makes no sense.» He said the government owed the Social Security Foundation (IKA) about 9.8 billion euros in contributions and the 1 percent of gross domestic product that is envisaged by law. This sum is projected to rise to -12.38 billion by the end of 2008, while the contributions due to the other pension funds come to about -1.5 billion. Panagopoulos said the debt from the 1 percent contribution is now estimated at -3.38 billion, while a further -3.2 billion was also due from held deductions of the 3.80 percent levy for IKA’s healthcare services. The state’s obligations to IKA, he added, include -1.2 billion in older debts and more than -1.5 billion spent on social policy programs. An additional -1.5 billion was outstanding in the form of unpaid social security contributions, a large part of which has been pocketed by workers in the broader public sector. Panagopoulos claimed that if the government had honored its obligations, IKA’s healthcare service would now be in a surplus instead of a deficit which is financed from other sources. He said there was need to create new sources of social security revenues that would go into a «piggy bank» to make up for the losses in the reserves incurred as a result of improper uses. These sources would include the profits of public utilities, a percentage of privatization revenues, extraordinary levies on «super-profits» and incomes, and the lifting of tax breaks in favor of the Church. Finally, Panagopoulos urged the government to come out and state clearly what it intends to about its arrears, adding that the purpose of the 24-hour strike called by GSEE for December 12 is precisely to highlight its demands on the social security issue. Report: Greeks must retire later to ward off crisis Greece must raise the real retirement age, merge a multitude of pension funds and review all disability pensions to avoid a social security crisis, an experts committee report obtained by Reuters said yesterday. The report said pension costs could rise to 25 percent of gross domestic product by 2050 from 12.5 percent this year unless measures are taken as proposed by the committee set up to tackle Greece’s pension crisis, due mainly to an aging population. «The social security system remains in a critical condition as long as we do not take the necessary measures,» said the report commissioned last year. «The legacy we owe future generations is mainly to reform the social security system.» The conservative government was re-elected in September promising to make the system viable without raising age limits or contributions. It has made pension reform the top item of its policy agenda and has called social partners to a dialogue. Labor unions had rejected the call, accusing the state of dipping into funds over decades. «We are against the proposals by the committee of wise men and we oppose any rationale about raising retirement age,» said the deputy president of the GSEE private sector umbrella union, Alekos Kalyvis. «The government set up this committee to render scientific gravity to the changes it wants to promote.» «The main problem with the pension system is its funding – the state and employers must pay their dues. The problem will not be solved by raising the retirement age and cutting benefits,» said Costas Papantoniou, the vice president of ADEDY, the public sector umbrella union. Government officials have said pension funds face actuarial deficits of close to -400 billion, about twice the country’s annual GDP, and will run out of cash in 15 years without reforms. The central bank and the European Union have called for urgent measures. In Greece, men generally retire at age 65 and women at 62, but either can stop work any time after 35 years of employment. But many job categories are entitled to an early exit, often with full benefits. Unions counter that the problem is exaggerated and pensions are low, more than 70 percent are below 600 euros a month. The report said the pension shortfall weighs on Greece’s fiscal deficit and competitiveness. «Given the realities of globalization, such a development would lead mathematically to recession, unemployment and a deterioration of the standard of living,» it warned. It also asked for a review of how pensions are estimated and recommended that social security be divided from the minimum, state-backed poverty pensions. The report said the state must take measures to encourage people to retire later, collect unpaid pension contributions, regularize illegal immigrant workers and computerize all pension funds, which must invest their assets better. The present system is not only set to go bust if unreformed but is socially unfair, wasteful and disorganized, it added. «The system’s long-term viability is a top priority for Greece because social cohesion, solidarity among generations and the battle against poverty and social exclusion hinge on it,» it said. (Reuters)