Social Insurance Fund 'Atomic Bomb' - Papadopoulos
Parliament is set to consider cost-cutting measures in the social insurance fund after DIKO MP Nikolas Papadopoulos said that if the pension fund was a time bomb, the social insurance fund is an 'atomic bomb,' in an interview on state television.
The MP, who has become a strong advocate for economic austerity measures in government, said that communist party AKEL is hiding behind state employee trade unions to try and influence cost-cutting measures because it does not have the power to do so in the House of Representatives. The accusation was denied by AKEL spokesman Stavros Evagorou, who said "we're not hiding behind anyone."
The House recently approved a 3 percent contribution by state employees to the pension fund, triggering public sector union anger over what they say was a betrayal of an agreement for 2.5 percent. Papadopoulos denied that political parties made an agreement with unions, saying that the two groups only discussed a number of scenarios. Contributions ranging between 1.5 and 4 percent were discussed, he said.
As far as the social insurance fund is concerned, Parliament has been waiting since January for a report on the fund from the Ministry of Labour, said Papadopoulos. Labour Minister Sotiroulla Charalambous said that the report is ready and is being checked by the auditor-general. It is the first report on how things have changed since 2009, she said.
Approximately 71,000 state employees contribute 3.4 percent to the social insurance fund. This is half of what is paid by private sector employees, who pay 6.8 percent. Since the state employs the 71,000 on its payroll, it pays an additional 11.1 percent on their behalf to the fund. In the private sector, the remaining 11.1 percent is split between employers and the state, with companies paying 6.8 percent and the state contributing 4.3 percent.
In effect, each working individual contributes a total of 17.9 percent to the social insurance fund, but in the case of state employees, the government has a much bigger bill to face.
Another factor which could weigh heavily on the state's overall costs for this fund is the influx of legal migrants from the EU, all of whom are legible for benefits such as unemployment support, which are paid out of the fund.
The next plenary session in Parliament is expected on September 15th, and judging from Papadopoulos' comments, there will be a reckoning and calling to account on the social insurance fund amid a mood of cost cutting set to continue into 2012.