Permanent threat

A survey by the Foundation for Economic and Industrial Research (IOBE) on the country’s social security system raises yet again what is a major economic and social problem, which both governments and citizens prefer to forget about due to the cost of available solutions. However, our «relaxed vigilance» – to use a recent apropos phrase by Bank of Greece Governor Nicholas Garganas – does not mean that the problem has gone away. On the contrary, for every day of inaction the problem becomes greater, and if no courageous move is made to bring about a radical change it is certain that we will one day be faced with an even greater burden: requiring even more painful solutions than those we are avoiding today. If social security is a problem for the whole of Europe, the IOBE study brings home the fact that in Greece (as well as Italy and Austria) it is getting worse at a much faster rate. The aging of the population, longer life expectancy and high unemployment means that each person in the work force has to provide for more and more pensioners. The IOBE estimates that if 12.6 percent of the GDP was spent on pensions in 2000, at the current rate we will need to spend 19.6 percent of the GDP in 2030 and in 2050, 24.8 percent. This means that one euro out every four produced will have to be spent on pensions. One does not have to measure these estimates at current prices in order to realize the full import of their warning. All the experts, beginning with the European Union, warn that this will happen if steps are not taken now. As to whether one survey’s prediction is one or two points lower than another does not, unfortunately, do anything to ameliorate the image of over-indebted social security system. And as the EU has been saying since 2001, the burden will be greater for countries that have a large public debt, like Greece, since they face high inflexible outlays on debt payments and have no margin for increasing funds for pension systems. The social security problem is a major threat for the Greek economy, but also for the equilibrium of its society since the more the situation deteriorates, the harsher the measures to fight it will have to be. So as difficult and unpopular as it may be, and as much as governments and unions might want to avoid it, we will have to deal with this issue now for the good of the country. Calmly, without spasmodic moves, taking into account all the feasible ways to rationalize and improve the system, but with continuity and persistence so that solutions can be found. Tomorrow, it will be that much more difficult.