NEWS

Think tank urges rethink on pensions

An economic think tank yesterday urged the government to open the Pandora’s box of pension reform, warning that Greece has one of the most rapidly deteriorating state pension systems in the European Union. The Foundation for Economic and Industrial Research (IOBE) – which is sponsored by the Federation of Greek Industry (SEV) – issued the findings of a recent study on the pension system one day after the head of Greece’s biggest bank, National Bank of Greece Chairman Takis Arapoglou, called for a more rational approach to «national» matters such as pensions and social security. «It is highly necessary to address the problem immediately, as it is deteriorating at high speed and the current inaction may lead our country into a dead end,» the IOBE report said. The government has steadfastly refused to tinker with the politically explosive issue of pension reform for the next few years, turning a deaf ear to growing calls for change. IOBE said Greece, Italy and Austria have the most rapidly growing pension-linked problems in the EU. This is due to the country’s aging population, low birthrate and rising life expectancy. «In Greece, expenditure on state pensions reached 12.6 percent of GDP in 2000, and is expected to increase to 19.6 percent in 2030 and 24.8 percent in 2050,» IOBE said. «In other words, for every 100 euros produced by the entire Greek economy in 2050, 25 will be spent on state pensions.» The think tank advised measures to encourage Greeks to invest in private pension schemes. «Contemporary trends in pension reform worldwide involve the creation of multiple-tier systems,» the report said. «These ought to incorporate the redistribution of wealth, savings and insurance in separate administrative and financial mechanisms or pillars, through compulsory systems of state insurance and private management, as well as optional insurance systems whose management is purely private.» Responding to the survey, the General Confederation of Greek Labor (GSEE), Greece’s umbrella labor organization, warned that it would fight hard to prevent any reforms to the extant social security system. «We will oppose any effort targeting workers’ pension rights,» a GSEE statement said. «Private insurance has a different part to play, which should under no circumstances be confused with that of social security,» GSEE added. «Various centers and business interests have launched an attack on the country’s social security and pension system.» GSEE linked the IOBE report with recent comments in a similar vein by Bank of Greece Governor Nicholas Garganas and Arapoglou.