A Promise to Protect Pensions Will Test Greece’s Red Line on Austerity

Teachers in Athens protested against job cuts and other austerity measures on Wednesday.

Πηγή: New York Times
By NIKI KITSANTONIS
Sept 18 2013

ATHENS — With a fresh inspection by Greece’s foreign creditors looming next week and labor unions leading a new wave of strikes, the government here has drawn a red line: it will keep pushing economic reforms but vows to impose no more austerity measures on Greeks already battered from three years of tax increases and pension cuts.

That could prove a hard promise to keep.

There is an estimated shortfall of 2.5 billion euros, or $3.3 billion, in the country’s social security funds for the year. And Greece is peering into an even larger chasm, an 11 billion euro financing gap that its international creditors have said the country will face as its debt payments come due over the next two years.

A third foreign bailout, on top of the total 240 billion euro in bailouts given to Greece since 2010, is now assumed to be necessary.

No wonder Greek trade unions and labor experts are warning that, despite the supposed red line, further pension cuts are likely. The concerns brought thousands of Greeks to the streets of Athens on Wednesday, calling attention to a two-day strike by civil servants, whose salaries and pensions have already been cut by 30 percent over the last three years. The strike was called to protest the government’s plans for thousands of forced transfers and layoffs in the Civil Service, but fears about pensions were in the air.

“Just let them try and cut our pensions again,” said Maria Vassilopoulou, a 45-year-old nurse taking part in the protest. “They’ll have a riot on their hands.”

The Greek labor minister, Yiannis Vroutsis, denied over the weekend that pensions would be withheld or cut. “I want to reassure people that their pensions will not be touched,” he said. “Families can make their plans feeling safe and secure.”

But retirees are on edge. Stathis Meltakis, a 65-year-old car mechanic who retired this year, has been counting on a monthly payment of 850 euros from the country’s biggest pension fund for private sector workers, IKA, which provides health coverage to 5.5 million people and pensions to more than 800,000. But last week, the union representing IKA workers warned of cuts of 10 to 30 percent in pensions next year.

“I’ve no idea when I’ll get it or how long the checks will keep coming,” Mr. Meltakis said. “You can’t be sure of anything anymore.”

With Greece still not meeting the financial targets set by its international creditors, labor unions and economists worry that public pensions and state social security spending, which this year will total 18 billion euros, could be reduced again.

“Basically, the pension system is collapsing,” said Savas Robolis, a prominent Greek labor economist who leads the research institute of the private workers’ union, the General Confederation of Greek Workers. He said that the funds’ decline was long in the making, after years of mismanagement, but that the country’s debt crisis dealt the final blow.

With unemployment at a record 28 percent, fewer workers are paying into the funds, which have been sapped, too, by the early retirements of thousands of civil servants scrambling to escape forced transfers and layoffs.

Mr. Robolis’s report called for growth-enhancing measures to increase the size of the Greek work force. Currently, only one Greek works for every two who do not. He also warned of the need to find ways of bolstering social security revenue.

Of immediate concern is how to plug the social security funds’ estimated deficit for this year of 2.5 billion euros.

Unlike the country’s banks, Greece’s pension funds were not recapitalized after a 50 percent write-down of private Greek debt last year, part of the country’s second bailout. The funds, as a result, came out of the bailout with a loss of 12 billion euros.

Debts owed to IKA — mostly by employers delinquent on their social security contributions — ballooned to 8 billion euros, from 4.8 billion euros in 2010, the union representing IKA workers said. The union’s warning was followed by reports in the Greek media that IKA borrowed 150 million euros from the state to pay pensions in October.

Mr. Vroutsis, the labor minister, acknowledged over the summer that the country’s pension system was “not viable” and “in need of a fundamental overhaul.” Among the proposed measures is the creation of an electronic system for employers to declare their contributions. An estimated half-million self-employed Greeks are thought to be illegally avoiding their obligation to pay into the system.

At the same time, a crackdown on social security fraud — a problem considered as pernicious as the country’s widespread tax evasion — has seen some results. A unified payment system started operating in June and identified at least 50,000 false claimants, many of whom had been collecting the pensions of dead relatives for years.

“In a short period of time, we managed to put sturdy foundations in an old and rotten structure,” the Labor Ministry’s general secretary, Panagiotis Kokkoris, said.

While larger countries in the euro zone with debt problems, including Spain and Italy, have also cut benefits, the impact of the changes has been less acute than in Greece, where three years of austerity measures have deepened a recession and brought political and social upheaval.

The Greek pension problem is expected to be on the agenda next week when officials from the European Commission, the European Central Bank and the International Monetary Fund meet in Athens. Other points of discussion are expected to include additional forced transfers and layoffs in the Civil Service, lagging tax collection and a slow-moving privatization drive. Hanging over the meetings is that 11 billion euro funding gap, which could necessitate another bailout, albeit one much smaller than the previous two.

Despite the bleak numbers, Greece is predicting a primary surplus — revenue not counting debt payments for this year — chiefly because of a boom in tourism.

Prime Minister Antonis Samaras pledged last week to give 70 percent of any surplus to pensioners on low incomes, but political opponents accused him of making false promises.

Already, pressure is building on Mr. Samaras’s fragile coalition government. Teachers, hospital staff and other civil servants, as well as lawyers, are on strike this week.

“Pensions are the easy target,” said Mahi Triantafyllou, a 58-year-old high-school teacher, at one protest. “They’ll hit us again.”

Crisis-Hit Greece Cuts Lifeline to Minority in Albania

81-year-old Vasili worries about making ends meet after loosing his pension

Πηγή: Balkan Insight

March 13 2013

Athens’ decision to scrap pensions for the Greek minority in Albania has left the community worried about its future wellbeing. 

For more than a decade, financial allowances paid by Greece to older members of the Greek minority in the Dropull region of southern Albania have provided an important economic boost.

Nearly 18,000 members of the Greek minority in Albania received a €330 per month pension from Athens, costing Greece €71.2 million a year.

In an area that has seen massive outward migration over the past two decades, pensions several times higher than those paid by the Albanian state helped rebuild houses and boost consumption in the local economy.

However, with its finances in tatters, Athens has been forced to cut the pensions as part of the IMF- and EU-imposed austerity drive.

The move has left many elderly people without an important economic prop.

According to last year’s census, the Greek minority accounts for 0.87 per cent of Albania’s population of 2.8 million, mainly concentrated in the region of Gjirokastra, Saranda and Himara.

While Greek minority politicians remain hopeful that the aid will be restored, albeit at a lower rate, locals are concerned about what the future holds.

Marianki, a 76-year-old grandmother from Dervican, in the upper Dropulli area, says she has not received her pension from last month and is already thinking of the difficult choices she will have to make.

“What should I do first, go to the doctor or spend money for food?” she asked. “It’s very difficult to live on the pension I get from the Albanian state, which is only €60.”

Vasili, an 81-year-old, says that he also has not received last month’s Greek state pension.

“The pensions have been a great help for us old folk living here, and for those who moved across the border with their children,” he said.

“I understand the economic crisis that Greece is suffering, but it is hard to make ends meet on the €100 I receive from the Albanian state,” Vasili added.

 

Jorgo Militi | Photo by : Telnis Skuqi

Jorgo Militi, a former journalist for the now defunct Greek minority newspaper, Lajko Vima, says the Greek pensions were vital for the local economy.

“A lot of houses in Dervican were revamped through the pensions, people spent more, and the whole region’s economy benefited from them,” he said.

Acknowledging that the cuts will be painful, Militi says most people understand the crisis that Greece is facing, and hold no resentment toward Athens.

“If Greece overcomes the crisis, I believe it will open its hand again,” he said. “No matter how we sometime see it from afar, Greece is a generous state and nation,” he added.

Dhimitri Maluqi, head of the commune of Upper Dropull, says that the local economy will feel the burden of the pension cuts.

“This is revenue that will now disappear from every Greek minority family and the impact will be undeniable,” he said.

Mayor Maluqi, who is also the head of the Greek minority organization Omonia for the Gjirokastra area, however, remains hopeful that something may change.

“We have had contacts with the Greek government and we believe that something will be done,” he said.

“However, Greece is suffering a severe economic crisis, so that even if the pensions are restored, they will surely be smaller,” he added.

Despite their positive impact on the local economy, the Greek state pensions have always been controversial in Albania.

For decades, Greece maintained a territorial claim to southern Albania, which it calls Northern Epirus.

As a result, Greek moves to foster economic and cultural connections to the region have always been eyed with suspicion in Albania.

Many Albanians see the pensions as forming part of a wider agenda, aimed at building up a large community in southern Albania that identifies primarily with Greece.

Albania's Minister of Labor, Spiro Ksera

They also believe that many people only declared themselves of Greek nationality in order to benefit from Athens’ generosity.

However, Spiro Ksera, Albania’s Minister of Labor and Equal Opportunities and an MP for the Dervican area, says the pensions should be viewed like the remittances that Albanian emigrants send home to their families.

“The MPs from the Epirus area in the Greek parliament are drafting a new law, and are looking at all the possibilities under the conditions that Greece is now in, to restore the subsidies,” he noted.

“Through this aid the Greek minority has invested more money [in Albania], which has ultimately helped their integration into the wider community,” he added.

Ksera said misconceptions in Albania about the pensions from Greece stemmed from a lack of knowledge about the community and its values.

“People should come here and see their hospitality, and realize the positive contribution that the Greek minority has made in strengthening the Albanian state,” he continued.

“Nationalist who cry foul for reasons of political expedience cannot break the bond created between the two communities.”

Militi, the journalist, agrees, arguing that the minority has served to act as an important bridge between Albania and Greece.

“Like every bridge, the stronger it is, the better the bond between the two nations,” he concluded.

Working in America: Public vs. Private Sector

Πηγή: ABC News' Dan Arnall reports:

As the protests in Wisconsin bring the issues of public sector workers pay and benefits into the national spotlight, it’s important to understand the actual differences between what government worker and private sector workers actually get in return for their efforts.

WAGES

The latest data from the Bureau of Labor Statistics (2009) show that government workers make about 5 percent more than private sector workers on average.
But, as can be seen in the following chart, the headline numbers hide some major disparities beyond the headlines.

Average Annual Wage
Federal Govt. Workers $67,756
State Police $61,000
Local Firefighters $60,572
State Govt. Workers $48,742
State Legislative Workers $48,129
Government (all types) $47,552
Private (total sector) $45,155
Local Govt. Workers $43,140
Local Schools $41,113

Average Annual Wage
Private Sector CPA $71,216
Federal Govt. CPA $67,531
Local Govt. CPA $64,050

SOURCE: BUREAU OF LABOR STATISTICS, 2009

Local teachers make 9 percent less than the average private sector worker. And federal employees are substantially better paid than the average state worker.

But working for the government doesn’t automatically mean a bigger paycheck.

Take, for example, accountants. Government data shows that a certified public accountant who works in the private sector will have an annual salary of $71K. That same certification and education will lead to a $68K average salary for the federal government and $64K if you work for a local government.

UNION MEMBERSHIP

Some of this headline pay disparity is likely attributable to the union representation many in government enjoy. In 2010, the Bureau of Labor Statistics data showed that 36.2 percent of public sector workers were unionized, compared to a 6.9 percent union membership rate for private sector workers.

Workers in education, training, and library occupations had the highest unionization rate at 37.1 percent.

RETIREMENT BENEFITS

Public sector workers also are significantly more likely to have traditional pension plans – called “defined benefit” plans. The latest data from BLS showed 20 percent of workers in the private sector have pension plans. In the public sector, defined benefit plan coverage is four times greater -- about 79 percent.

HEALTH CARE BENEFITS

The latest Kaiser Family Foundation survey on the costs of health insurance showed government workers are more likely to be offered health insurance while they work and in retirement.
In retail firms, for example, only 48 percent of workers were covered by health benefits offered by their firm (the worst industry for insurance coverage), compared to 80 percent of workers in state and local government (the best industry for insurance coverage).
And those state/local government employees are paying less for coverage than their private sector neighbors.

Data from Kaiser shows the average employee cost for “family” health coverage was around $3,700 in the latest year. Employees in the service sector pay about $4,200 for similar family coverage, mostly because their employers require a bigger contribution from the employee to get the benefit.