Government establishes social solidarity fund

In April 2007, the Greek government passed a new law setting up a Special Social Solidarity Fund to provide increased incomes and social protection to long-term unemployed people and those made redundant through company restructuring. The draft bill had previously been submitted to the Economic and Social Council of Greece, which stressed that the initiative is, in principle, a positive measure that aims to protect the aforementioned categories of workers.

Reasons for setting up fund

Law 3552/07 passed in April of this year established the Special Social Solidarity Fund. The government argued in favour of its creation due to the growing problem of relocalisation of industry in recent years, arising from competition from countries with lower labour costs. This has resulted in company closures, job losses and the impending prospect of unemployment for people who have worked for many years in certain sectors of production and whose lives depend on the income from their jobs. The newly-established Fund specifically aims to support unemployed people aged over 50 years and those employed in declining areas of production – for example, textiles and footwear – along with areas of the country with high unemployment and where people find it difficult to access the labour market.

The Fund is to be financed by the state budget, European Community financing and part of the contributions paid to the Labour Force Employment Organisation (OAED). The Fund’s management committee consists of nine members who will serve three-year terms on an equal footing. Two are employer representatives proposed by the Federation of Greek Industries (SEV) and the National Confederation of Greek Traders (Εθνική Συνομοσπονδία Ελληνικού Εμπορίου, ESEE), and two are employee representatives proposed by the Greek General Confederation of Labour (GSEE).

Conditions for receiving support

To receive income support from the Fund’s account, a person must meet a number of conditions. They must:

• be insured with the Social Insurance Foundation-Unified Insurance Fund for Employees (IKA-ETAM);

• have at least 7,500 days of insurance contributions;

• be over 50 years of age;

• be employed in an enterprise in a declining sector of the economy, for which the units of production are located in an area where the unemployment rate is at least double the national average.

These criteria may be changed by ministerial decision.

The support granted to workers consists of either 80% of pay at the time the employment relationship is terminated or a sum of up to €900 for people taking part in training and retraining programmes. Additional support may be granted by ministerial decision to people providing services of a social nature in public and non-profit organisations.

Views of social partners

The social partners, through the Economic and Social Council of Greece (OKE) (OKE Opinion No. 168, 2/2007), have noted that the creation of a social solidarity fund is a useful mechanism for intervention, ensuring labour market re-entry and social insurance regularity for workers in this target group. Moreover, the creation of a solidarity fund is a practice that other Member States have already adopted, within the context of the overall European Commission guideline on the creation of a fund to address globalisation.

However, OKE noted that definitions relating to the ‘geographical area’ and ‘declining sector of economic activity’ should be defined by legislation and that criteria should be set out; otherwise, there is a danger that the law will be applied piecemeal, without any objective implementation criteria. OKE also concluded that the ability to change (through an ordinary ministerial decision) the conditions which an unemployed person must meet in order to be included in the favourable provisions of the law creates legal uncertainty and undermines efforts towards long-term planning. Furthermore, OKE highlighted that the fund must be managed on the basis of tripartite representation, where the government, employers and workers have an equal footing, since part of the account’s funds are taken from employers’ and workers’ contributions. Such a move would change the current structure, in the employers and trade unions have two representatives each on the nine-member committee. Finally, OKE considers that similar provision should be made regarding the impact of the implementation of the new Common Agricultural Policy (CAP) on various areas of agriculture.

Commentary

The creation of a fund to support and protect long-term unemployed people and those who are made redundant due to restructuring is undoubtedly a positive development; the social partners share this view. However, alongside this mechanism, the provisions of Development Law 3299/2004 also apply, which allow for the availability of state aid for enterprises, so that they can create new jobs, as they did in the past. This development has met with opposition from employee representatives. It appears that the emphasis has been put on a posteriori selective interventions, such as support for people who have left the labour market, rather than on policies that could boost employment as a whole and provide measures of social protection for disadvantaged areas of the country by creating additional jobs; mechanisms such as the solidarity fund could be used to play an auxiliary role in the overall planning to boost employment and increase social protection.

Stathis Tikos, Labour Institute of Greek General Confederation of Labour (INE-GSEE)