Retirement beats work
In a bid to balance the need to support the lowest-income earners against the need to keep spending in check, the government appears to be preparing a compromise in which it will give public sector pensioners a generous increase of 4-5 percent while delaying raises for civil servants. According to sources, the government will announce these measures before Prime Minister Costas Simitis’s annual address on economic policy at the Hellenic Trade Fair in Thessaloniki early next month. Although Bank of Greece Governor Nikos Garganas has warned that great care must be taken with regard to incomes policy because (being in the eurozone) the central bank no longer has the means by which to combat inflation, the government appears to be acknowledging the political need to increase benefits in view of the local and regional elections looming in October. On Thursday, Simitis told a Cabinet meeting that handouts would be avoided, in a bid to keep Greece within the bounds of the EU’s Stability Pact. Under the anticipated changes, an estimated 160,000 pensioners who worked in the civil service are to get an annual increase of 4 percent while another 90,000 retired members of the military are to get 5 percent. At the same time, the new wage scales for active civil servants are expected to be delayed for another year, until the beginning of 2004, in which year national elections are to be held. Government officials hope that this give-and-take will be seen as a sign of sensitivity to the plight of the lowest-income earners while also limiting the demands for higher wages. Public sector employees are expected to get an increase of 2.5 percent, lower than the expected average inflation rate of about 3 percent this year. Public utility company employees are expected to get a 3-percent raise. Finance Ministry officials say that the 2003 budget will foresee an increase of 7.5 percent in spending on incomes compared to this year, with overall spending climbing 5.9 percent. Revenues are expected to climb by 6.5 percent, compared with the initial forecast of a 5.5-percent rise, because of the apparent failure to meet revenue targets this year and the need to finance tax breaks next year. The 2003 budget also has to show a surplus, in accordance with the Stability Pact.
