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Shock and awe due to the new measures

Shock and awe due to the new measures

The painful measures required by the Troika so that our country gets the new loan in order to avoid default were put on the table of the political leaders meeting at approximately 5pm...

The painful measures required by the Troika so that our country gets the new loan in order to avoid default were put on the table of the political leaders meeting at approximately 5pm.

The new package of measures includes cuts in pensions, as the Troika seems to weigh up the explosive elements for the revenue shortfall, which are further exacerbated by the financial state of insurance funds. Specifically, the new text provides for a 15% cut in the main pension of the PPC, OTE and banks, and a 7% of those insured in the Nautical Fund, retroactively from 1.1.2012.

Things for young workers are worse since besides the cuts in benefits and the further 22% reduction in everyone’s salary, the new Memorandum provides for a further cut of 10% for those under 25 years of age.

Similarly, there is going to be a total removal of 150000 public servants in 2015.

1)    Pensions
A framework law for the supplementary funds in order to reduce the service charge by 0.4% of the GDP (600m euros reduction). The measure is specified to reductions by 15% of the main PPC, OTE and Banks insurance funds and a 7% reduction in the Nautical Insurance Fund. Reductions begin on 1.1.2012.
Review in late June of funds with periodic lump sum payments.
System of collection of contributions. Revision of the method of fundraising. Completion of the program by September 2012. From March 2012 onwards there will be a unification of contributions and taxes and a consolidation of control of payment of taxes and insurance contributions.

2)    Allowance
Savings target totaling 1.5% of the GDP for the program period (2013-2015). The measures will include holiday programs and an income limit for providing benefits.

3)    Labour market
Reduction in unit labor costs by 15% during the term of the program. Social dialogue. If by the end of February an agreement hasn’t been reached, then it is up to the government to take the legislative initiative to adjust its cost.
-    Structural measures in collective bargaining
-    Maximum duration of collective agreements: three years
-    Current contracts expire one day after the program
-    Continuance: reducing the time from six months to three.
-    To the extent that there is no new collective agreement within three months, the basic salary is that of EGSEE. Additional benefits are maintained generally, such as: position, children, education, hazard. These are continued until a new agreement (collective or individual).
-    Elimination of permanence in all companies
-    Salary freeze until unemployment falls below 10%.
-    Elimination of unilateral recourse to arbitration. Only basic salaries can come to arbitration. The economic situation of the company must be taken into account.
-    Adapting the basic salary
-    Reduction of the basic salary by 22% on all levels.
-    Freezing of the minimum levels to be determined after the reduction by the end of the programming period.
-    An additional reduction of 10%
-    By the end of July 2012, there should be a clear timetable for the review of EGSSE to align this with competing countries.
-    Non-wage costs
-    Reduction of contributions by 2% with the elimination of the contributions of OEK-OEE. The two organizations are shut down.
-    A further reduction ib social security by 3% from 1.1.2013 without overloading the budget. Hopefully the efficiency will be increased in the collection of contributions. If there is a reduction in income coming from the additional cost of the budget, there is a budget adjustment for all pensions as a provision.
-    After the actuarial debate the special supplementary funds of companies with a significant cost of contributions are to be treated as contributions from other operations covered by IKA. In any case, they will not burden the state budget.
In case these measures do not work, there will be additional measures.

4)    Measures for Public Sector employees
Review of all special payslips to savings of 0.2% of the GDP on an annual basis.
Review of pay scales
Reduction of public sector hiring by 150000 for 2011-2015.
Maintaining the recruitment ratio of 1:5
Labor reserve
Reduction of contractors.
Recruitment restrictions on military and police academies and schools, which generally provide for automatic recruitment in the public sector.
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