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The ratio between workers and pensioners is almost one to one in Greece

13 January 2012 / 21:01:25  GRReporter
2944 reads

Victoria Mindova

The ratio between workers and pensioners is almost one to one in Greece, admitted the Minister of Employment and Social Security George Koutroumanis during a workshop on The Future of the Social Security System. Currently, the pensioners in the country number over 2.76 million and the workers who pay social security contributions are about 2.73 million. This is one of the main reasons why today's social security system is considered one of the black holes of the Greek budget.

Another problem in the same system is the informal economy and undeclared work, which contribute to deepening the problem. Only one in three workers in Greece is working on a contractual basis and has social security. Social security costs of total wages in the country are approaching 40%, which also has a negative impact on the legalization of undeclared work.

The lack of effective control is also a serious challenge which the Greek government is trying to fight. It is not easy to change the operating system, but Koutroumanis stressed that nevertheless something has been achieved. The revision of basic pensions saved the country 2.6 billion euro in 2011.

"Pensions in Greece bore the burden of the crisis, mainly because other infrastructures and reserve funds have not been established in the country," explained the Minister. Major gaps in social policy are covered by pension funds, he said. The purpose of the levies is not specified and this will play a bad joke on future pensioners in Greece, who will never be able to enjoy the pensions, which their parents are getting or will get in the near future.

Kenichi Herosi of the International Work Organization also spoke at the workshop and stressed that Greece needs to liberalize and modernize the social security system. A change similar to that made in Eastern Europe in the 1990s is necessary. It consists of three pillars and distributes the revenues in the third age into basic pension, supplementary occupational pension and private insurance from the insurance market. Herosi noted that the second pillar failed to work very well in Bulgaria and now, these funds are supported mainly by the state budget.

The problems that European governments have to solve include the overall increase in age as well as non-payment of contributions, suggesting the absence of any income in the elderly. Thirdly comes the restructuring of economies and labour markets so as to find suitable jobs for older people. The idea is for them to continue to work and produce, but to take jobs suitable for their age and capabilities.

After 2020, the number of elderly people will increase dramatically in Europe. This gives European governments 10 years to adopt the necessary reforms to meet the higher burden on the pension system.

"If you want a higher pension, you must work longer," said the representative of the Swedish Ministry of Employment and Social Security, Peter Odmark, who shared his country's experience in optimizing the social security system. "Any crown, for which I have worked in my life, contributes to my final retirement."

There is no official retirement age in the Nordic country, but there are different age limits that determine the stages of retirement. The first is that Swedish citizens are entitled to begin receiving pension from supplementary pension (the second pillar of social security) at the age of 61. At the age of 65, the citizens can receive their basic pension and have the right to remain in employment, but after the age of 67, they cannot remain in employment.

Tags: EconomyMarketsSocial securityGreeceDeficitPension funds
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