Labor minister says Athens will not negotiate some parts of reform proposals

10 January 2016
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Greece is not prepared to compromise with lenders on some key aspects of its pension reform plan, which the government expects to be voted through Parliament with the full support of all the coalition MPs and perhaps some opposition lawmakers, Labor Minister Giorgos Katrougalos said.

Less than a week after submitting the plan to the country’s lenders, the minister argued that there is no reason for the institutions to quibble with it.

“The memorandum of understanding does not give them the right to ask for the adjustment to be carried out exclusively by pension cuts if we meet the targets in another way,” said Katrougalos. “Anyway, there have been 11 rounds of cuts so far based on the argument that the pensions system needs to become sustainable. How can people be convinced that it will actually work the 12th time?”

He said that most of the pension savings demanded by lenders were achieved through measures that have already been passed, leaving another 600 million euros to be cut. Katrougalos said almost 400 million would come from increasing employers’ contributions by 1 percentage point and another 150 to 170 million by raising employees’ contributions by 0.5 point.

The minister argued that his proposals would lead to minimal cuts and that it introduces a comprehensive overhaul of the social security system to put it on a sustainable footing.

“For the first time in Greece we will have single-speed pensioners,” he said. “All the pensioners will be subject to the same rules.”

The plan foresees new pensioners bearing part of the adjustment burden as they will receive lower retirement pay than existing pensioners, at least in the short term. Those earning supplementary pensions are also likely to see their earnings reduced.

“Main pensions are our red line,” said Katrougalos. “We are not intending to sacrifice auxiliary pensions, though. We are entering negotiations with a proposal to save them.”

Apart from insisting that existing main pensions should not be slashed, Katrougalos said that the other point the government is not willing to give in on is its proposal for anyone who has completed 15 years of work to receive a basic pension regardless of their income during that time. Greece’s lenders seem to favor a system by which pensions are only paid out if 20 years of work have been completed and that they be linked to the recipients income during that time.

“The 15-year period is non-negotiable,” said the minister. “The income criteria are non-negotiable.”

Katrougalos expressed confidence that all 153 coalition MPs would vote for the proposals drafted by the government. He also said that he has received encouraging signs from some opposition deputies and believes there may be wider support for the measures.

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