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The Greek social security system is falling apart

16 September 2012 / 19:09:01  GRReporter
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The Council of Ministers to the Council of Europe wants the Greek government to explain in detail what the current situation in the national social security system is, noting that the matter is urgent. A decision, accepted on 12 September, which will soon be made public, warns about the possible collapse of the social security system because of the restrictive measures, rising unemployment and cuts in salaries and pensions.

Assessing to what extent Greece has adapted to the messages of the European Code of Social Security, which has been signed and entered into force in Greece on 9 June 1981, the Council of Ministers underlines in front of the Greek government and the Troika, that the restrictive measures will seriously affect the survival of the national insurance system. The decision notes that the observations and forecasts in it are based on data from the sector of the national social security system in Greece for the period 1 July 2010 to 30 June 2011. Up to date information is required about the period after the new measures and reforms and after November 2011. The Greek government will also have to explain how it can comply with the requirements of the European Code about social security in terms of solidarity and justice in a restrictive environment.

The particular decision makes it clear that in May 2010, after the signing of the Memorandum between the Greek government and the International Monetary Fund (IMF), the European Commission, the Eurogroup and the European Central Bank, the mission of the International Labour Organization (ILO) visited Greece, by request of the Ministry of Employment, to support the reform of the pension system. According to information given by the ILO, the number of unemployed has reached 1,000,000 up from 800,000 - the number during their visit, - and this results in a 5 billion euro loss per year for insurance funds - a fact that calls into question their survival.

The Council of Ministers, on the basis of these data, noted that Greece is in danger of a collapse of the national insurance system, which could suffer from a permanent limitation of its finances. Due to this fact, it will be forced to further reduce the security and social services provided to levels below the lowest according to the European Code. The decision says that the mission of the ILO notes for Greece that the drastically reduced level of social and insurance contributions of all kinds reduces the confidence of citizens in the insurance system and causes concerns about to what extent there is social justice in dealing with the economic crisis.

As part of the measures to deal with the reduced revenues, it is projected that private companies and law firms will undertake the collection of contributions by employers and companies with delayed payments to the Social Insurance Institute (IKA). The funds will focus on the purely insurance part and on the services provided to the insured, they will save time and money and will not be related to the cash part of the contributions and the corrupt practices. At the same time, the closure of companies with debts to IKA exceeding eight months, is also foreseen.

The intervention of private companies in a purely state sphere - up to now - will cover the transitional phase until a common mechanism for collecting all tax and social security obligations is created. Until then, some of the IKA employees will be trained in order to be able to undertake the collection of contributions from other insurance funds (including expired contributions from freelance jobs). This new mechanism will include private companies which will relieve the insurance funds from personnel costs.

These main points are noted in an analytical report - a collection plan of contributions drawn on the account of the government by Belgian technocrat Patrick de Metz, an IMF official, who was invited by the Greek side to help create ways to tackle the "black hole" formed by non-payment of contributions by the social security funds. De Metz, who yesterday met with representatives of the Ministry of Employment, Social Security and Welfare, is working in close cooperation with officials from the Ministry and IKA, and has undertaken the supervision of the unification process for the collection mechanisms (taxes and contributions), as provided in the Memorandum.

In his report, De Metz notes that a strategic decision can be taken to delegate the authority for collecting social security contributions to the tax authorities. Insurance organizations will provide legal authority for collecting contributions and will focus on revenue management and provision of services to the insured. De Metz's plan provides for the use of a single tax register by which debtors are identified. At the same time, information will be collected in the form of requests by employers and freelancers. Employers will deduct taxes and contributions from the incomes of workers and will submit them to the relevant institutions, and debtors who do not pay their contributions will be identified electronically.

Tags: Social Security IKA International Monetary Fund Patrick de Metz
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