ECONOMY

Social security agreement could be signed tomorrow

Two of Greece’s thorniest issues, social security reforms and privatization of state-owned companies, are due to be resolved shortly, the government said yesterday in a move which should remove some of the uncertainties plaguing the country and at the same time bolster popular support for the governing party. With government policy apparently drifting aimlessly, the ruling PASOK party has seen its popularity sag in opinion polls over the last year, with opposition party New Democracy widening its lead to eight percentage points. The lack of specifics has also put a damper on the stock market. News of imminent action in two critical areas yesterday sent the stock exchange up by 0.15 percent. An agreement between the State, trade unionists and employer groups on social security reforms could come as early as tomorrow, Economy and Finance Minister Nikos Christodoulakis said yesterday. The minister, who is scheduled to meet with the main employers and unionists tomorrow on the issue, said the gathering will fine-tune the issue of funding for the social security system and should conclude in the signing of an accord on the changes. He said the agreement «will decisively resolve the social security issue for the next few decades.» It will also remove a source of uncertainty for workers and improve investment opportunities in the country. Social security reforms are essential as Greece faces a worsening demography problem. IKA, the principal state social security system, has a deficit exceeding more than 4 percent of gross domestic product. The pay-as-you-go system which covers more than 2.5 million workers could see the deficit soar to 9 percent of GDP without any reforms. Unfunded liabilities are estimated at over 200 percent of GDP. At some 12 percent of GDP, Greece’s social security spending is also the highest in the eurozone. Failure to reform the ailing social security system could also prompt credit rating agencies to downgrade Greece’s credit rating. On the State’s sell-off program, Christodoulakis said the scheme is shifting into a faster gear. «The privatization program is entering the concluding stage and I believe this will boost the economy,» he said. More importantly, the sell-offs are expected to improve Greece’s competitiveness and attract foreign direct investments. The previous day, the government announced strong investor interest in the privatization of the country’s tourist assets, including the casino on Mount Parnitha, three marinas in Attica and agriculture-focused company Agrotouristiki. Other pending sell-offs expected to be finalized within the year are Hellenic Shipyards, Olympic Airways, the Post Office and the Postal Savings Bank. Further tranches of shares in telecoms operator OTE, electricity utility PPC and lottery games company OPAP are also been prepared for this year.