Civil servants’ and farmers’ funds will foot the bill

As the labor minister announced the government’s proposals, the question on everyone’s lips was where so many previously unavailable funds had been found. How is it possible that the ailing social security sector, which absorbs over 3.3 percent of GDP and is expected to rise to 11.10 percent by 2030, does not require strong action? What is the basis of the confidence shown by government unionists and advisers in the hidden ace that National Economy Minister Nikos Christodoulakis is expected to pull out of his sleeve? The late Andreas Papandreou’s policy of post-dated deficits and staggered increases has been adopted by his «reformist» successors as part of their creative accounting methods. With regard to the social security system, it is the handout being given by the government to the civil servants that is «post-dated,» in order to secure part of the resources needed in the crucial period 2008-2010. By adding a 60,000-drachma bonus to civil servants’ pensions, the additional contributions they be will required to pay for this bonus as of January 1, 2003 are to constitute the yeast in the dough for a new social security base that will fund all payments. According to initial estimates, the State will reap resources of about 300 billion drachmas between 2003-2008 solely from the additional contributions from civil servants (estimated at about 12,000 drachmas per person per month). This capital will function purely as an internal loan, covering obligations to those who are to retire after 2012 (for those who entered the civil service in 1982 and have 30 years of service). Practically speaking, existing arrangements that work in favor of the governing party’s image, covering the requirements of IKA and averting worse developments for staff at banks and state enterprises but without building a unified system, are being funded to a large extent by civil servants. Of course, this is nothing new; even so, the present government’s creative accounting is not restricted to the state sector, but extends to the farmers’ fund (OGA),which is essentially a new fund as it only began operating as a social security organization (and not an agency for distributing financial aid) from January 1, 1998.

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