ECONOMY

Gov’t says social security reforms will cure problems

The government yesterday stuck to its guns, insisting that its proposed social security reforms would solve the system’s ills despite an actuarial report calling for more drastic action and the main opposition party walking out during the parliamentary discussion of the draft legislation. The government-commissioned report said Greece’s aging population will gradually reduce the ratio of the working population to retirees, with the result that the social security system will see its actuarial deficit rocket sky-high. The current deficit is estimated at more than 4 percent of gross domestic product and IKA’s unfunded liabilities at 300 percent of GDP, the highest in the EU. Critics said the current proposals, watered-down versions of last year’s recommendations, would actually raise the actuarial deficit because of the generous benefits to workers entering the work force after 1992 and to special categories of contributors. Economy and Finance Minister Nikos Christodoulakis maintained that «the social security reforms have been carefully researched, are economical at the same time, and will not burden the system excessively in the future.» Not only do the proposals set up a feasible funding method but they meet the demands of workers, he added. Christodoulakis said the report from the UK Government Actuary’s Department was based on conservative projections as regards the population, economic growth and the labor force. It was possible that these parameters would turn out better than expected, he said. He said the forecast population of 11.7 million in 2035 «would in all probability be higher» and «we could in the coming years see more entrants into the work force,» the result of the integration of more migrant workers into the system. Referring to the soaring actuarial deficit expected to burden IKA, the principal social security fund, after 2027, Christodoulakis acknowledged that state funding would not be able to cover the deficit. However, a reserve fund built up over the years should be able to deal with the actuarial deficit. He said the depth of the government’s commitment to future generations could be seen in the issue of non-marketable bonds to be issued in 2008. Undeterred by the government’s reassurances, the trade union confederation body GSEE yesterday reiterated its intention to go ahead with a 24-hour strike on June 18 together with ADEDY, the civil servants’ union. OTOE, the banking employees’ union, also said it would stage its fourth consecutive 24-hour strike on June 17 despite concessions from the government on several of its demands. It has vowed to hold rolling one-day strikes until the State bows to its demands, key of which is the creation of a single fund for banking employees. OASA and ISAP, the urban bus and subway bodies, and seamen’s union PNO will also be joining in the June 18 strike.