Handouts target crucial voters

Pensioners and civil servants will be the main beneficiaries of the extra support measures that are to be revealed by Prime Minister Kyriakos Mitsotakis in his keynote speech at the Thessaloniki International Fair on September 10.

Government officials are still mulling over the idea of support for vulnerable segments of the population – those on low incomes, the unemployed, the heavily indebted – perhaps in the form of cost-of-living checks, as it did last April.

The two main measures have already been decided and hinted at: a rise in pensions next year for the first time in 12 years and the extension of the abolition of the so-called “solidarity contribution,” which had been imposed on incomes higher than €12,000, to civil servants and pensioners in 2023, after no longer being required of private sector employees this year. Thus, in a year when not one but two national elections are expected – a quirk of two successive election laws, the first of which ensures no single party will have a majority in Parliament – a non-negligible segment of the electorate is set to become a beneficiary of government largesse.

The cost of the measures is far from negligible: Pensions are estimated to rise 6-6.5%, which will require €600 million from the budget. The estimate on the pension hikes was made on the basis of the European Commission’s recent forecast of average 2023 inflation at 8-9% and 4% growth. The Finance Ministry now holds that inflation could be lower, but pensions are not expected to increase by less than 6%.

Abolishing the solidarity contribution will cost the budget an estimated €470 million. Combined, with their pension hikes, pensioners will gain a total of €870 million.

Civil servants may also be granted the end of a 1% charge on their salaries that goes to their Welfare Fund. This has not been decided yet.

The cost-of-living checks, if comparable to those handed out at Easter, will be worth €300 million, but will be a one-off measure.

Other handouts under consideration include home-buying incentives targeted at young people, giving universities funds to build dormitories and providing incentives for owners of empty properties to develop them.