Mitsotakis, Stournaras cite supplementary role for private sector in social security; rival minister warns of Pinochet model

27 February 2019
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Main opposition New Democracy (ND) leader Kyriakos Mitsotakis on Tuesday reiterated his pledge to abolish a controversial legal framework for social security contributions paid by the country’s self-employed professionals and craftsmen – enacted by the current Tsipras government – while replacing it with a new system that includes private sector participation

The ND president said that if his party wins the next election, the “Katrougalos law” will be scrapped. The latter increased monthly contributions for most categories of self-employed professionals, craftsmen and even professional farmers.

Speaking at an Athens event organized by an association representing insurance companies in the country, the pro-market and pro-reform Mitsotakis repeated that his party’s platform revolves around the triptych of “lower taxes and contributions – more investments for new jobs – and a state in the service of the citizen, not the party”.

Allowing even a supplementary role for private sector involvement in Greece’s “binary” social security system – contributions by employees/employers collected, managed and disbursed by an often spendthrift Greek state – has been anathema to most political parties over past decades, with left-wing SYRIZA vehemently opposed on ideological grounds.

On his part, Bank of Greece (BoG) Gov. Yannis Stournaras mostly echoed Mitsotakis’ position, while clarifying that the intent is not to replace Greece’s social security system with private insurance coverage and retirement packages, but to allow the latter to act in a supplementary fashion.

He underlined that private sector involvement is allowed in practically all European countries, while international best practices dictate that social insurances systems are flexible and adaptive vis-a-vis macroeconomic and demographic pressures.

In later reaction to the ND leader’s comments, Labor Minister Efi Achtsioglou charged that Mitsotakis aims to “destroy and privatize the public social security system”, while lobbing an oft-repeated criticism by SYRIZA ministers and cadres, namely, that Mitsotakis is an “unrepentant supporter of the Pinochet (system).”

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