The PASOK governments under Costas Simitis fought a battle over social security and labor relations reform. That battle was lost. Simitis believed that his vision of economic and social modernization depended on his success in dealing with these fundamental problems. Regardless of PASOK’s declarations back then, the need to solve these two problems has been underscored by scientific studies highlighting the looming burst of social security funds and the suborn unemployment figures – at least to the degree that these are owed to the rigidity of the labor market. The main reason why PASOK went on to lose the election is that it failed to rally the political and social forces behind the banner of modernization. Simitis actually came close to stepping down when he realized that Socialist cadres and unionists were no longer behind him. Simitis did not actually quit, but he was forced into backing away – a retreat that is widely seen as the beginning of the end. The New Democracy government never vowed to resolve these issues. But it is now clearly working on a solution as the problems are too big and too costly to ignore. Whatever it finally chooses to do, the government is sure to find them getting in its way. Prime Minister Costas Karamanlis does not want to repeat Simitis’s mistakes and is determined to seek a consensus with all the different elements. Everyone must realize that it is in the general interest to finally solve these problems.