Government scraping barrel for social solidarity fund

The government’s financial team is examining state spending cuts in a bid to come up with an estimated 720 million euros needed to fund its Social Solidarity Income (SSI) program for 2017 for Greeks hardest hit by austerity.

The country’s international creditors, who have raised objections to the proposals for the program's funding saying it would derail the 2017 budget, have, so far, rejected most of the government’s proposals – including cuts to the Defense Ministry’s budget valued at around 250 million euros, which is considered not credible, and broader reductions across the public sector – insisting that savings should come from a reduction in tax breaks and through the scaling back of a series of benefits, and not through more taxes.

The issue has put further pressure on the government, as failure to reach consensus on the solidarity program will raise obstacles to the revised midterm program, which it is eager to complete in order to submit its draft budget for 2017 on October 3.

The SSI has been included by the government in the revised midterm program but without saying where funding will come for 2018 and beyond – which is something creditors have rejected.

Alternate Finance Minister Giorgos Houliarakis and Alternate Labor Minister Theano Fotiou discussed SSI funding on Wednesday with representatives of the country’s creditors but, reportedly, to no avail.

Another meeting will take place on Thursday between Finance Minister Euclid Tsakalotos, Houliarakis and foreign auditors on budget forecasts.

Meanwhile, Labor Minister Giorgos Katrougalos told Reuters in an interview on Wednesday that Greece cannot comply with labor reforms demanded by the International Monetary Fund as a condition to take part in the country’s third bailout.

The government has described the IMF’s demands as nothing short of a ban on the right of workers to negotiate wages and working conditions on a collective basis.

Greece, he said, cannot endure a further deterioration in labor relations. “We want to reinstate collective bargaining because it’s the core of the European social model,” Katrougalos said.

Nonetheless, the EU and the IMF insist that an inflexible labor force is what has made Greece less competitive.

Katrougalos also dismissed a demand by Greece’s lenders for the state to determine the minimum wage, currently at 586 euros, saying that should be the call of workers and employers.