€ 50 mln shortfall in SIF, says Auditor General

The Auditor General’s report for the Ministry of Labour found a EUR 50 mln deficit in the Social Insurance Fund for 2013, compared to a 156 mln surplus in 2012.

Speaking at the House Audit Committee in the presence of the Labour Minister Zeta Emilianidou, Auditor General Odysseas Michaelides said that the amount of payments for unemployment benefits have recently exceeded the total revenues and the reserve for this account (unemployment benefits), and therefore as at 31/12/2013 this fund had a debit balance of EUR 77 mln.

Also the account of other benefits as at 31/12/2012, showed a debit balance of EUR 10 mln, because the amount of payments (grants, aids, benefits) significantly exceeded the total revenues and reserves. On 31/12/2013 this debit balance increased to EUR 26 mln.

Regarding the outstanding debt, Michaelides said that on 31/12/2013 this was EUR 97 mln owed to the Social Insurance Fund and EUR 38 mln to other funds. In terms of current liabilities, he noted that on 31/12/2013, EUR 73 mln were pending for collection from employers and selfemployed for the SIF and EUR 25 mln for other funds.

He said that Audit Office has recommended to the Ministry of Labour to determine a timetable for establishing an action plan that will make it possible to recover these debts. He also referred to the investment policy of the SIF, indicating that for many years the state borrowed the surpluses of the und and other funds on favourable terms, and that this policy does not ensure the interests of the funds. As he noted, the balance of the Fund on 31/12/2013 was EUR 7.43 bln.

“Of this amount 99.2% was deposited to the State of which 98.6% was deposited into the General Government Account in the form of deposits with very low interest rate of 0.5% (31/12/2013) and 1.25% (31/12/2012”, he explained.

Emilianidou said that the Ministry was not yet ready to face all the problems from the economic crisis, as a few years ago there was full employment with an unemployment rate at only 2.8%, while today unemployment stands at 16%.

She said she agreed with the Auditor General, however it was important that in 2014 the SIF deficit has been reduced to EUR 19.9 mln.

As regards the recovery of debts, the Minister of Labour said that in 2013 the House approved a bill which provided that the Ministry would not proceed to criminal prosecution and would even suspend fines for a period from September to December.

On the investment policy of the Fund, she said that the Ministry has sent a letter to the Ministry of Finance, which replied that at this stage the only thing that government could do was to find the best possible interest rate for the deposits of the Fund to the government.