Government braces for talks on pension reform

3 January 2016
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The first week of the year will be a taxing one for Prime Minister Alexis Tsipras and his government, which aims to submit the finalized draft of its pension reform plan to Greece’s creditors ahead of negotiations that are certain to be tough.

In comments published on Sunday, Tsipras said his government will not give in to “unfair” demands.

“We will honor the agreement to the letter but without accepting unfair demands,” he told Real News, referring to the terms of Greece’s third bailout.

He added that the agreement offered Athens a certain level of flexibility, noting that “we have no obligation to find the money exclusively from pension cuts.”

Tsipras conceded, however that pension reform is necessary as the system is “on the verge of collapse.”

He was echoed by the Labor Ministry’s general secretary, Andreas Nefeloudis, who said the state will be unable to pay pensions in a year’s time if the system is not overhauled now.

The aim is for the bill to go to Parliament by January 15. This will be preceded by some intense negotiations.

According to sources, Tsipras has instructed government officials to convince creditors that the reform can pass without cuts to main pensions.

There are some fears that creditors will retain a tough stance on debt relief even if the government satisfies them on pension reform. If creditors push back the launch of debt talks, political tensions are certain to intensify.

In the meantime, sources said, Tsipras is focused on keeping his coalition with Independent Greeks tight rather than reaching out to potential new partners.

Both Tsipras and Social Security Minister Giorgos Katrougalos insisted over the weekend that the pension bill will be approved by coalition MPs.

Finance Minister Euclid Tsakalotos admitted that he was expecting tough talks with the creditors, noting that the new year will bring “successes but also defeats.”

He conceded that lenders are seeking more measures through 2018, noting that they often query calculations by the Greek side.

On pensions, the minister acknowledged that the system contains many “distortions” that must be rectified but would not determine whether Athens will push for an increase in social security contributions and a tax on banking transactions as a way of averting further cuts to pensions.

The key challenge for the SYRIZA coalition, Tsakalotos said, is “to what extent it can incorporate the agreement with the creditors within a plan to exit the crisis that offers prospects to the social groups that have suffered most since 2009,” he said.

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