Social security reform a test for Tsipras

The government is bracing for the make-or-break battle over social security reform in the first days of January – a difficult negotiation with partners and creditors which will also test the ruling coalition’s cohesion.

Prime Minister Alexis Tsipras’s office has drawn up a timetable according to which the government’s proposal will be presented to the quartet of creditors immediately after the New Year, most likely on January 3 or 4. On January 8, technical teams from the quartet are expected in Athens to discuss the proposal, with the aim of presenting a bill to Parliament by January 15 at the latest.

According to aides of Tsipras, one “red line” is the further reduction of main pensions, while they propose to raise social security dues instead. The same sources say they have prepared alternative proposals, including a possible tax on bank transactions. They stress, however, that this is not a favored option, expressing optimism that the creditors will accept a raise in social security dues despite their reservations.

The government is also afraid of a possible reduction in supplementary pensions, which will lead to a similar result for many – a reduction of income. It hopes to at least prevent a cut in low supplementary pensions. The prime minister’s office will be holding meetings with government MPs, in a bid to prevent anyone voting against the reform proposals.

In an effort to shore up support, on Christmas Eve the government issued a decree adopting parts of the “parallel program” rejected earlier by creditors. These include steps to tackle poverty, to organize asylum and hospitality procedures for refugees, to extend welfare workers’ contracts and to renew the functioning of centers that support the elderly and others.