ECONOMY

Social security reform conference

Social security reforms were brought out of cold storage yesterday at a national conference organized by trade union umbrella body GSEE, as Labor Minister Tassos Yiannitsis and trade unionists reiterated their divergent stands on the issue. Social security reforms were put on the back burner during the summer following widespread criticism of the state’s proposals. The depth of the opposition was manifested in two nationwide strikes in April and May. Despite the lengthy break, the chasm between the State and unionists on the controversial subject appears to be as wide as before. While the minister called for a dialogue with social and political partners and stressed the need to view the issue from a wider perspective, the GSEE leadership insisted that the problem lies more in funding than anything else. Noting that the problem will worsen in a decade, Yiannitsis said it was vital that social and political partners sit down and talk over the issue. The dialogue would be difficult but it is necessary and should be sincere, he stressed. Participants should also look at the whole picture rather than one side of it. Social security reforms are tied to the country’s economic and social growth, Yiannitsis said. This means that a solution to the problem should also contribute to economic and social growth. The minister said that adverse demographic patterns were the principal cause of the social security system’s current problems. The graying of Greece’s population is set to worsen in the coming years. Pensioners amounted to 14.1 percent of the population in 1991, but their numbers are estimated to rise to 22.7 percent by 2020. In 2020, we would need 2.1 million more workers than would be available then. This shortage cannot be covered by combating unemployment nor by clamping down on those who evade paying their dues, Yiannitsis said. The State in turn is committed to tripartite funding of the system and plans to inject 800 billion drachmas. The minister said that additional funding will only cover certain groups of pensioners and vulnerable groups such as the disabled and the sick. The social security system in the meantime needs to improve its asset management methods in order to boost returns from its assets. GSEE head Christos Polyzogopoulos, however, said the crux of the social security problem lies in the lack of funding, especially the State’s inadequate contribution. It was possible that the system could see its 5.6-trillion-drachma reserves disappear completely by 2004-2005 if no action was taken. By 2050, the inflow of funds to the system will account for only 2 percent of gross domestic product, he said. The solution to this is tripartite funding, with the state footing a third of social security contributions, employers four-ninths and workers the remainder. New funds could also come from legalizing immigrants, registering uninsured workers and cracking down on errant contributors. We cannot have a solution to the social security system without first increasing funding, Polyzogopoulos said.