January 9, 2016
Syriza government proposal for the survival of the pension system in Greece has been delivered to the institutions for consultation. The proposal is structured in a way to serve three major goals: a. protect the current pensioners; b. secure that new generations will receive pension; c. safeguard the pension system and avoid a total collapse.
The pension system in Greece has been at the center of discussion for decades. All previous governments did nothing to create a safe legal and functional environment, thus preferring to jeopardize the existence of this fundamental pillar of public administration and welfare state. In this respect, since mid-1990s, the Greek governments have chosen to gamble reserves of social funds and put at peril the pensions and the fate of millions of pensioners.
The proposal of Syriza government unveils the responsibility to reform the system under tumultuous times and amounting pressure from the creditors. The proposal package aims to safeguard primary and auxiliary pensions, without resorting to any kind of pension cuts, except for cases where pensions are irrelevantly high or irrational. Towards avoiding pension cuts (i.e. the 12th-13th in a row since 2010) for the majority of pensioners it is predicted an increase of social security payment, split between the employer and the employee. Employers will contribute with 1% and employees with 0,5%. Therefore, the burden of this increase is balanced and corresponds to the financial capacity of these two categories.
The proposal package also aims to create the necessary conditions to permit the self-financing of the system by the public income, i.e. meaning that it will be unified and based on the equal contribution of all employers and employees according to their financial capacity and with respecting the principle of solidarity for all generations. In other words, the proposal is fair and it is structured in a way that loses are minimized. Especially under the current conditions of strict austerity, it is the best possible “offer”, first to the next generations and then to the creditors that monitor the process and participate in the negotiations. The major problem that the government is faced with concerns the propaganda that domestic media are exerting to distort proper information of the public. This consequently affects the way the European public and major media outlets are perceiving the total reform process of the Greek government.
Nonetheless, nobody can predict the reaction of the creditors and whether they will accept this reform package. We are aware that the creditors want immediate results without counting on different variables that are imminent for this and other reforms. Instant growth or surpluses cannot come from this reform before 2018 as the system needs to adjust to the new environment. At the same time, and this is what is happening since 2010, the only proposal of the creditors and the previous Greek governments was to resort to pension cuts or massive layoffs just to preserve that public income would increase regardless of the dire social and macroeconomic consequences. This time is no more the same recipe.
To contact the author Dimitris Rapidis:
Author : Dimitris Rapidis