Released on: November 6, 2007, 11:23 am

Press Release Author: newnews

Industry: Financial

Press Release Summary: Top unionist Yiannis Panagopoulos says in an Athens News
interview thatreform of the social security system should start with finding extra
funds toreplenish squandered reserves

Press Release Body: HE GOVERNMENT has stated its intention to reform the social
security system and has launched a dialogue on the issue. The country\'s biggest
union, the General Confederation of Greek Workers (GSEE), has agreed to take part
but said that before any other decisions are taken, the funding issue must be
resolved.

GSEE president Yiannis Panagopoulos answered the Athens News\' questions in writing,
explaining the reasons behind this precondition and the union\'s position on other
major issues.

GSEE has set social security system funding as its top priority in the dialogue
currently taking place regarding the system\'s reform. Why is that?

The Greek social security \"system\" is the only similar system in the EU-15 that
lacks sufficient reserves. The picture becomes clear if we take into account that
just two percent of the system\'s annual proceeds come from the returns of its
assets. In other EU member states, respective returns fetch up to 25 percent. The
Greek state, through its conduct, is solely responsible for this non-existence of
reserves.

[The state] has facilitated the squandering of contributions for development and
other reasons. So it is clear that if action is not taken to restore the squandered
reserves, the system will never stand on its own two feet. Instead the situation is
getting worse constantly - current contributions are not enough to pay for
pensions... Contribution evasion costs the system around 4 billion euros annually.
Ministries and other public organisations and utilities are some of the biggest
culprits.

What does the state owe social security funds?

Altogether the state owes funds more than 10 billion euros. Legally, it should hand
over one percent of GDP to fund IKA-ETAM [the country\'s biggest social security
organisation]. This means that just in 2008 the state should hand over around 3.35
billion euros. This figure will have to be increased by another 500 million euros
since GDP was recently reviewed upwards by 9.6 percent. These debts have accumulated
because the state refuses to abide by the law and pay what the law says it should.

In a recent statement, GSEE said, based on the findings of the recent International
Labour Organisation (ILO) study into IKA, that if the state pays what it owes and
combats contribution evasion then the system will not have financial viability
problems for the next 30 years. Does this mean that you are against any major
changes, despite population changes?

We never said anything like this... We do not accept the current situation in which
the system provides 71 percent of IKA pensioners with less that 600 euros a month
and 84 percent of widowed pensioners with less than 400 euros a month. These are not
decent provisions, and it is for this reason that 66 percent of Greek pensioners are
in immediate danger of finding themselves under the poverty line.

We are asking for the system to change and improve its social effectiveness.

Moreover, the recent study by the ILO - which the government itself ordered - shows
that if the state fulfils its legal obligations and fights contributions evasion,
then IKA will not face a financial viability issue until 2040. Regarding population
changes, I want to say that they truly constitute a future threat and should be
treated as such. But in no way are they responsible for the state the system is in
today.

How can the state pay off its debts to social security funds when, according to
media reports, the budget is \"up in the air?\" If the Greek state continues to be
unable to pay, what will happen?

This is a matter of political choices. The state always has funds, but the issue is
how it allocates them and especially which part of these funds is allocated for
social protection. For your information, I note that according to the most recent
data by Eurostat, Greece devotes for social protection per capita an amount that
just about approaches 50 percent of the average amount that the other EU-15
countries offer.

Employment ministry officials say that new legislation can go ahead even before the
dialogue on social security reform is completed regarding issues where there is an
acceptance by all sides that things must change - for example, disability pensions.
What does GSEE make of this?

There might truly be concurrence regarding the need to make changes in certain
areas, but this does not extend to the measures we are pursuing. The government, for
example, wants changes and its ulterior purpose is to reduce state budget outgoings.
We, on the other hand, are asking for changes that will improve average and lower
pensions... Especially regarding disability pensions, I have to point out that today
they stand at around 11 percent [of the total], a proportion similar to that of most
developed European countries.

Does GSEE agree with the amalgamation of Greece\'s 170-odd social security funds,
another of the government\'s state reform aims?

It is one of GSEE\'s standing objectives. But any amalgamation presupposes that two
factors are taken into account. Firstly, the rights of those insured with the funds
should be respected. They should retain their pre-amalgamation rights when they
transfer to the great fund [IKA]. This has already been decided on by the 2002
social security law. Secondly, the new fund that takes on the obligations of the
amalgamated funds should be boosted financially with the exact amount that is
required for the coverage of the extra obligations it is taking on because of the
amalgamation. Amalgamation cannot be based on the reduction of rights already
provided for by the law. Neither is it permissible for a social security fund to be
forced to pay out pensions to people from whom it has never received any
contributions.

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Contact Details: Athens, Greece