The government is counting and re-counting the available resources in order to fulfill its promise to increase incomes in 2025, looking for ways to support mainly the crowded wintering zones of wage earners and pensioners and together to reduce the burden of the accumulated accuracy of the last three years, but he really feels that the possibilities are limited.
In last week’s preparatory Council of Ministers for the International Exhibition of Thessaloniki, there were thorough discussions about the difficult “lines” of everyday life, about the development prospects, about the expectations that Prime Minister Kyriakos Mitsotakis wants to revive and about dealing with the negative impressions he leaves behind. of government activity, as five years of continuous and undisturbed rule now count and tolerances are running out, expectations are irritating and demands are swelling.
Pay increases are constrained by the goal of maintaining competitiveness, and raising pensions runs up against tight fiscal limits and adverse demographics that require serious provisions for the sustainability of the social security system in the future.
Experts point out that the so-called “invisible debt” of the insurance system, that which results from its long-term obligations, approaches 60% of GDP
At 15.5% of GDP, the pension expense
Therefore, nothing spectacular can be expected, apart from some corrections in the area of inflation or even slightly above it. As prominent economists point out, current pension costs, despite the many restrictive measures of recent years, remain at high levels, close to 15.5% of GDP, and they also point out that the so-called “invisible debt” of the insurance systemwhat results from its long-term obligations, approaches 60% of GDP.
Some even do not hide their concern, predicting that based on the prevailing demographic conditions in recent years and given the acceleration of the aging of the population, the insurance issue will return acutely again in a relatively short time.
Some even estimate that this could happen within the current decade to 2035, due to the expected mass retirement of the remaining Baby Boomers, those born after 1960. “We will see the insurance problem again soon in front of us” they typically say, pointing out that in addition to the expected increase in the number of pensioners, there will also be a question of the adequacy of insurance contributions due to the inclusion of a limited number of workers in the insurance system.
The responsible Deputy Minister of Labor and Social Security Panos Tsakloglou rejects the possibility of a new insurance crisis coming in the next ten years, provided of course that the existing retirement age limits are not undermined. And he highlights this apparently because there is already pressure from various groups to relax existing rules.
He explains that specifically the age limit of 62 years with 40 years of work should not be circumventednor the equivalent of early retirement. Otherwise, he downplays the impact and weight of the coming mass retirement of the Baby Boomers, explaining that the number is not that big because Greece did not record a mass entry into the labor market as happened in the US. And this is because in the 60s, despite the intense development conditions, there were massive waves of immigration.
A “positive” European report
In addition, Mr. Tsakloglou invokes the European aging report and the actuarial studies registered there that want the Greek insurance system to be durable in the coming decades, provided always that the existing rules will not be affected. He acknowledges that the burden of social security’s “invisible debt” is large but insists that forecasts, based on the country’s development prospects, mean that social security costs will decrease as a percentage of GDP from 15.5% today to 11.5% in the coming years.
Despite this, he is not reassured, and to the many questions raised about the probable reduction of contributions and, by extension, the available resources of the social security system, he answers that specific policies are already in place, able to cover the eventual appearance of the problem.
He typically mentions that the Ministry of Labor is implementing measures that favor the mass integration of women into work, such as the development of nurseries throughout the country in order to remove a critical factor that limits the employment opportunities of new mothers. This program will be strengthened in the near future and, as he clarifies, will be included in the Prime Minister’s announcements in Thessaloniki.
Also, for the faster and easier entry of young people into the labor market, large-scale training and qualification programs for young workers financed by the Recovery Fund are running. It also attaches great importance to removing barriers to employment for those receiving disability pensions. The previous ban on the employment of those receiving a disability pension has now been lifted and soon new legislation will further facilitate the recognition of contributions from additional work after the disability to pension adjustment.
It also reminds that it is already paying off to reintroduce able-bodied older people into the labor market after the pension cuts to working pensioners have been lifted. About 250,000 retirees already declare themselves employed and even if the picture seems great from the number of retired farmers who declared en masse that they continue to work, the measure is considered successful and ways and measures are being sought that will favor the reintegration of retirees into the labor market.
The proposals to introduce 200,000 workers
However, despite Mr. Tsakloglou’s explanations, there are not a few economists who insist that the insurance system will soon need more contributions to adequately meet its obligations.
They characteristically note that the solution can only be provided by the introduction of 200,000 workers who are currently missing from the construction, agricultural and tourism sectors.
Under the condition of course, as they say, that they will officially join the labor market and our social-insurance system, enjoy decent wages and pay the corresponding contributions, so as not to fall into the delinquency and criminality they raise safety issues in society.
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