No progress between Athens, creditors on social security reform

By Stelios Papapetros

No progress was reported from Thursday’s negotiations in Athens between Greek labor ministry officials and institutional creditors on the issue of social security reforms, with the biggest obstacle apparently centering on the level of decreases to supplementary pensions.

According to reports, the IMF delegation continues to insist on its positions regarding Greece’s social security system, with IMF managing director Christine Lagarde, in fact, referring to what she called an unsustainable system in the country, during an address on Thursday.

The Fund is also opposed to a government proposal for raising monthly social security contributions paid by working people and their employers – 0.5 and 1.0 percent, respectively – in a bid to avoid cutting retirees' benefits.

European creditors, other reports claim, are more flexible in terms of passing the burden to working people, as long as other spending cuts are made in the wider Greek social security system.

The IMF is also insisting that supplementary pension funds pay benefits from their reserves, while adhering to a “zero deficits” clause, which also means not relying on state support, either direct or indirect. European creditors, meanwhile, are reportedly willing to adopt a laxer “sustainability clause” for auxiliary pension funds.

In tandem with the social security reforms, creditors’ representatives are also keen to commence talks on labor market liberalization.

Last July’s third memorandum between Athens and creditors foresaw that Athens would harmonize its legal framework on mass firings, collective bargaining agreements and union activity with international and European “best practices”. Contacts between a work group of experts with international labor organizations would have preceded changes.