Re­port gauges ef­fects of re­forms

Euro­pean Com­mis­sion anal­y­sis takes an in-depth look at the third bailout’s terms and likely im­pact

Kathimerini English - - Focus - ROULA SALOUROU

Changes inso­cial se­cu­rity and in­creases in value-added tax rates ac­count for the lion’s share of Greece’s fis­cal ad­just­ment ef­fort in 2015-18, an as­sess­ment re­leased yesterday by the Euro­pean Com­mis­sion es­ti­mates.

For 2015 alone, ac­cord­ing to the eval­u­a­tion re­port on the so­cial im­pact of the bailout pro­gram, the fis­cal ad­just­ment is es­ti­mated at 2.5 bil­lion eu­ros (1.4 per­cent of gross do­mes­tic prod­uct), ris­ing to 6.5 bil­lion in 2016, reach­ing 8 bil­lion in 2017 and 8.2 bil- lion in 2018 (4.3 per­cent of GDP).

The Com­mis­sion says that the mea­sures con­tained in the pro­gram, if ap­plied in full and in a timely man­ner, will help Greece to re­cover sta­bil­ity and de­vel­op­ment, while also help­ing to com­bat the coun­try’s most press­ing so­cial needs and chal­lenges.

The tough­est re­form is the cur­tail­ment of pen­sions for those who re­tire be­fore the age of 67 (or 62 with 40 years of pen­sion con­tri­bu­tions). The Brus­sels-based in­sti­tu­tion main­tains this will de­ter un­de­clared in­comes and stay­ing in the la­bor mar­ket only un­til 15 years’ worth of con­tri­bu­tions have been reg­is­tered. As it re­ports, more than a quar­ter of new re­tirees in Greece have 15 years’ worth or less of in­sur­ance con­tri­bu­tions.

The Com­mis­sion main­tains that rais­ing the re­tire­ment age to 67 re­moves the in­cen­tive for early re­tire­ment with­out any se­ri­ous im­pact on the ad­e­quacy of ben­e­fits. It ex­pects the re­forms to in­crease job re­ten­tion, lead­ing to in­creas­ing con­tri­bu­tions to pen­sion funds and higher pen­sions.

Re­gard­ing the is­lands’ raised VAT rates, the Com­mis­sion ex­pects this mea­sure to come into ef­fect on Oc­to­ber 1, with two cri­te­ria: prox­im­ity to Athens and in­hab­i­tants’ high­est per capita in­come. The re­port states that about 5 per­cent of the pop­u­la­tion on Aegean is­lands has a higher per capita in­come than the main­land av­er­age, mak­ing re­duced VAT rates un­fair.

In terms of next year’s la­bor mar­ket mea­sures, the re­port says that flex­i­bil­ity in will in­crease em­ploy­ment and lib­er­al­ize closed pro­fes­sions. Spe­cial men­tion is made to the ne­ces­sity of the de­ploy­ment of wel­fare re­sources, while the Com­mis­sion ex­pects the im­ple­men­ta­tion of the Guar­an­teed Min­i­mum In­come scheme on a na­tional scale by 2017 to cover the needs of 1.2 mil­lion peo­ple liv­ing on the poverty line, cost­ing 0.5 per­cent of GDP an­nu­ally.

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