Four threats to EFKA may lead to pen­sion cuts

Kathimerini English - - Focus - ROULA SALOUROU

Four fac­tors are threat­en­ing the new Sin­gle So­cial Se­cu­rity En­tity (EFKA) this year and are ex­pected to lead to the ac­ti­va­tion of the au­to­matic fis­cal cor­rec­tion mech­a­nism be­fore 2019.

The first fac­tor con­cerns the gov­ern­ment’s pledge to re­lease main pen­sions to at least 120,000 re­tirees who have been wait­ing to be paid for at least two years. An­other threat to EFKA is the course of rev­enue col­lec­tion, as there is com­plete con­fu­sion re­gard­ing the so­cial se­cu­rity con­tri­bu­tions of free­lance work­ers, self-em­ployed pro­fes­sion­als and farm­ers.

The third fac­tor is the in­clu­sion of pub­lic sec­tor work­ers in EFKA, which is send­ing state spend­ing on pen­sions to 10 per­cent of Greece’s gross do­mes­tic prod­uct, as the In­ter­na­tional Mon­e­tary Fund has noted in its re­ports. The last – yet sig­nif­i­cant – risk con­cerns re­gard­ing ac­tual con­di­tions in the la­bor mar­ket, which has al­ready seen a huge in­crease in flex­i­ble forms of la­bor.

The so­cial se­cu­rity law in­tro­duced by for­mer la­bor min­is­ter Gior­gos Ka­trouga­los in­cludes three mech­a­nisms that au­to­mat­i­cally lead to cuts to ex­ist­ing pen­sions, be­sides the reductions to come from the way new pen­sions are cal­cu­lated. A key part in this is played by a clause added to the 2010 law on the state’s com­mit­ment that spend­ing on pen­sions must not ex­ceed 16.1 per­cent of GDP un­til 2060.

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