GSEE criticises draft social security law

There has been turmoil in Greece as the country seeks to cope with the draft law introducing drastic changes to labour relations and to social security payments. Now the unions, represented by the Greek General Confederation of Labour (GSEE), have put forward a series of counter-proposals demanding that there is a fairer social security system, that collective labour agreements be kept and that the government should not intervene in the private sector to freeze wages.

Content of draft law

The main clauses of the draft law on social security (GR1006019I) are included in the memorandum drawn up by the Greek government, the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) (GR1005019I). They focus on changes such as:

• raising retirement age limits;

• revising the list of arduous and unhealthy professions;

• changing the way in which pensions are calculated;

• extending the necessary contribution years for a full pension to 40 years.

The bill also abolishes the tripartite financing of the social security fund as the state is no longer obliged to provide any financing, except for the basic pension (currently amounting to €360 a month) and the pro-rata pension (funded solely by the employees’ and employers’ contributions). This means that the 1.3% subsidy from gross domestic product (GDP) to the pension sector of the Social Insurance Institute (IKA-ETAM), to the Security Fund of the Hellenic Telecommunications Organisation Personnel (TAP-OTE), to the social security sector of the Public Power Corporation’s (DEH) personnel as well as the subsidy of 0.4% of GDP to the pension sector of the Freelance Professionals Insurance Organisation (OAEE) are abolished as of 1 January 2010.

GSEE’s proposals

The social security policy in Greece already imitates, in more restrictive terms, similar changes made between 1990 and 2008 by other EU countries, including raising the age of retirement and changing the way pensions are calculated. In the case of Greece, this has led to a 20% cut in pension payments without addressing the need to fund new pensions.

Thus, after 20 years of cuts in social security and pension rights, these countries, as well as Greece, are now returning to deprive their social security systems of new resources, to challenge the level of pensions and the terms for granting them.

More specifically, the situation is becoming one where there will be:

• changes to the way pensions are calculated;

• a rise in the retirement age limits;

• an increase in the number of years at work;

• a restriction in the unfunded pension scheme;

• an expansion of the funded pension scheme through the abolition of tripartite funding;

• the withdrawal of the state as guarantor of the granting of supplementary pensions.

The Supreme Public Finance Court (ElSyn) has discovered certain constitutional problems in the draft law’s provisions on:

• the unification of the Pension Funds and the insurance of public servants by IKA-ETAM as of 1 January 2011;

• the powers granted to the Minister of Finance and the Minister of Labour to determine the amount of the basic pension;

• the withdrawal of pension payments from those pensioners found working;

• the refusal to cover shortfalls in funding or to guarantee the granting of subsidiary state pensions from 1 January 2011;

• the granting of survivor’s pension to disabled or minor children or to children who are students – this requires the application of the constitutional principle of equality.

Any decision about the goals and the contents of this draft law involves considering the bigger economic picture, given that both the calculation of pensions based on someone’s entire working life, plus the increase in years they are expected to work, require policies that ensure constant and stable employment plus a dynamic creation of new jobs.

Similarly, the expansion of funding elements in the pension system requires a safe and high return on investment of the social security reserves. At the same time, the constant increase in the retirement age limits is creating an environment that fosters an increase in unemployment and a deterioration of productivity levels due to the participation of a growing number of elderly workers.

GSEE points out that the Greek social security system has been steadily deprived of cash over the last 20 years and will be crippled by this new law. It adds that, according to an estimate by the International Labour Organization (ILO), the draft law will only marginally reduce the social security system’s long-term deficit of about €300 million a year. GSEE argues that there is an urgent need to find new resources outside the state budget and suggests increasing the rateable value of public and church property, and imposing taxes on gambling, banks and public utilities’ profitability, and casinos. New resources such as these would contribute to the formation of buffer capital enabling the social security system to meet its future needs.

Commentary

In these times of heightened social unrest in Greece, the country’s trade unions are increasing their action, with GSEE demanding that the collective labour agreements and the system of autonomous collective bargaining be protected; that the government should not intervene in the private sector to implement a freeze on wages; that a satisfactory National General Collective Agreement (EGSSE) be concluded immediately; and, finally, that the role of the Mediation and Arbitration Service (OMED) be preserved.

Savvas Rompolis, Labour Institute of the Greek General Confederation of Labour (INE/GSEE)