Employment Minister Fani Palli-Petralia distanced herself yesterday from comments by Bank of Greece Governor Nikos Garganas, which suggested that the government attempt to rein in salary hikes, as she presented the Inner Cabinet with plans for pension reforms that will be carried out this year. Garganas warned that the Greek inflation rate will rise this year to its highest level since 1999 and said that recent pay rise agreements were not helping the country’s competitiveness. However, Petralia responded to Garganas’s comments as well as the proposals on greater labor market flexibility made yesterday by a committee of experts by reminding all that the government retains the sole right to shape economic policy. «The labor policy of this government is not going to change,» said Palli-Petralia. «Committees deliver reports but the decisions for labor policy is formed and expressed only by the government and the relevant minister.» Petralia said that some auxiliary pension funds would be incorporated into the Social Security Foundation (IKA) by June, followed by further mergers by August. Petralia said that the final phase of the process would begin in October. The government aims to incorporate some 150 pension funds into just 13.