Promises to industry

The government has issued a number of promises to industrialists which appears to have won them over on a number of major issues, including reforms to the social security and tax systems, the new development law, privatization, investments and fiscal issues. At a closed dinner on Monday night, the government’s economic team, headed by National Economy and Finance Minister Nikos Christodoulakis, met with representatives of the Federation of Greek Industrialists (SEV), and, it was said yesterday, won them over. The meeting was held to help shake the basic positions of the two sides in light of SEV’s general meeting next Tuesday (May 28). For the first time, Prime Minister Costas Simitis will not be at the general meeting, as he will be attending a NATO summit. Christodoulakis described a broad range of efforts to revive the economy which will place emphasis on privatization, will support public finances through this and will secure funds for developmental tax policy. Christodoulakis promised a reduction in tax rates for businesses from 2003, limitation to 35 percent of the State’s stake in companies, more subsidies for investments in northern Greece and cover for dangers faced by the social security system – with the government agreeing to pay the IKA fund’s deficits. Details of the tax rates are to be announced by Simitis in his economic policy speech in Thessaloniki in early September. The industrialists asked for tax incentives to be disconnected from the increase of employment. But Christodoulakis rejected this, saying that increasing employment remained the government’s priority. He promised, though, that new flexible incentives would be included in the new development law when it is presented. Christodoulakis appears to have accepted SEV’s proposal according to which subsidies will be paid first and jobs created second. Christodoulakis won the industrialists’ backing on the issue of social security funding, on which detailed discussions were held – including working hypotheses on interest rates. He said the law will have been passed before the start of Parliament’s summer sessions this year. The government is hoping to present legislation to this end in early June. Labor representatives and employers’ associations will meet with the government tomorrow to discuss a «national social security pact.»