Small silver lining appears in the social security stalemate

Unions and the government appeared yesterday to have reached a consensus about the necessary changes to the indebted social security system. These changes, it seems, will be mostly marginal and will only affect those who retire after 2007. Labor and Social Security Minister Dimitris Reppas and his deputy, Rovertos Spyropoulos, met yesterday with top unionists representing civil servants, banks and public utilities. The ministry’s proposals tinker with pensions at the margins by increasing the «pensionable income» on which pensions are calculated and by decreasing pensions as a percentage of the «pensionable income,» from 80 percent to 70 percent. This latter change will be applied in 2008, with a 1 percent decrease annually, until the 70 percent level is reached. For these categories of employees, particularly civil servants, a large portion of a month’s take-home pay is comprised of several bonuses and extra payments. Until now, however, pensions were calculated only on the basis of the «basic salary,» meaning that they were far lower than actual paychecks. By agreeing to add about 176 euros to «pensionable income» the government is meeting part of the unions’ demands to include bonuses and extra payments in calculating pensions. Civil servants must have completed 35 years of employment to retire as early as 58. As in other sectors, they will be provided financial incentives to stay longer than 37 years. «What we have is still a building site; with today’s decisions we will be creating a template for the future,» said Adolf Rosenstock, economist at Nomura International.