The issue of the overhaul of the pension system in Greece is by far the most important and at the same time sensitive reform topic to date, especially with the Greek society experiencing a major exhaustion from the continuous austerity measures imposed.

With the pension reform blueprint submitted by the Greek government to creditors last week and currently under evaluation before its introduction to Parliament, Labor Minister Giorgos Katrougalos, has been communicating in the past days the Government’s main arguments, notably its standing point that there will be no further cuts in primary pensions. Speaking to Greek and foreign media, he underlined that the aim of the Government is to achieve a comprehensive reform for the country’s social security system, while assuring for redistribution of wealth, maintaining the levels of guaranteed pensions and intensifying the fight against tax evasion. He also stressed the need for economic growth but not to the detriment of employees and acknowledged that the negotiations with the creditors will be tough.

According to Minister Katrougalos, the pension reform plan moves along three main lines, which comprise the restructuring of the pension system, the action to tackle deficits and the presentation of a general alternative, equivalent to individual memorandum commitments.  It also calls for a recalculation of pensions, the unification of all pension funds into a single one and envisages a National Pension minimum of 384 euros to be offered without any income criteria.

In his most recent interview for the Wall Street Journal (12.1), the Labor Minister called on Europe to let Greece meet its fiscal targets mainly via economic growth and not belt-tightening and vowed to resist further pension cuts, contrary to many creditors’ demands.  Mr Katrougalos and other members of the Government are explaining to their interlocutors from the IMF and the Eurozone, that the reduction of pensions for a 12th consecutive time constitutes “a red line” but that there is room for discussion on other details of the proposal. He also called for measures that will promote growth in the economy and that will not burden it further with recession-bringing measures.