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Sunday, 31 January 2016

The Greek Pensions Debacle in the Era of the Neoliberal EU





By Van Gelis









From one end of Greece to another there are demos, protests, road blockades and pickets by professional associations and farmers. Their concerns are on the effects of the 3rd Bailout agreed on July 12, 2015 by all the parties in the Greek Parliament, apart from the KKE (Communist Party) and GD (Golden Dawn). Massive rises in taxations for the self-employed and a tripling of national insurance contributions are to be enacted for the continued payment of ever shrinking pensions. Each nation state has a shrinking tax base due to the rise of the transnational corporations and a zero tax regime, and as a result, the proportion the state wants to contribute to pensions is constantly being reduced.

Pensions Were gained Through Struggle

Until the late 1960’s most Greeks worked a six day week. Holiday pay wasn’t part of any package. The norm was a 9hour day. Healthcare was essentially private. Once the military junta fell in the mid-1970s to forestall a revolution wages went up, hours worked went down, holiday pay was inaugurated and a public health service was inaugurated by the 1980’s. The boss class was forced into concessions. But after joining the EU one line of work after another was opened up to competition and well paid work started to become scarce in the period when Greece started to be deindustrialised (1990 onwards).

Hence the costs of maintaining minimal welfare benefits increased whilst the cost and type of labour decreased leading to less money in state coffers. Most of these gains were accrued prior to the onset of mass migration into Greece when it was still a basic functioning capitalist nation state, not an overt colony of globalised imperialism.

The EU is squeezed between the USA and Asia

The demographic changes that are supposedly taking place as Europe’s population is living longer and is having less children are opening Pandora’s box for neoliberalism. Retirement is being set back further and further in everyone’s life (67 is the new 60), contributions are increased for those at work, and less is to be received when one reaches retirement age. In other words, more inputs across the board for a smaller outcome. We are moving forward allegedly making pensions more sustainable by heading for zero pensions or minimal basic pensions for the 85 year olds!

Latin America and Africa saw the biggest attacks on pensions since the onset of the global capitalist crisis (1973 onwards). As is noted below:

By the mid-1970's, as global economic conditions worsened after thirty years of expansion, optimism fell among policy makers and aging advocates. Economists recognized that growing numbers of poor elderly had not benefitted from the effects of economic growth and were condemned to destitution in the emerging world economy. But the experts were generally at a loss on what to do. Even advocates of welfare measures like Indian economist Amartya Sen began to doubt whether universal Western-type social security measures could have any relevance to poor, backward countries.

Many pension programs in the South stopped growing or began to contract. At first, economists blamed temporary setbacks like the oil crisis, the debt crisis, and budget deficits. Finally some concluded the problem was permanent and structural: "excessive" numbers of elderly. By the early 1980's, experts in the rich countries began to warn that countries in the South could not afford social insurance at all, or at least that major "reforms" would soon be necessary”. 1

The above arguments are being rehashed in the Greek pension crisis as a blueprint for the rest of the EU nation states. 2

It’s not easy to make overall comparisons either within the EU or between the European Union and Asia and the USA. There are more components to pensions than first meets the eye. These include the cost of healthcare, whether that is part of the deal or based on insurance (USA), whether there is a component of housing (like in the UK, Germany or France), the cost of living in each specific country, and whether there is purchasing power parity. In other words, looking at pensions on their own without taking into account other areas makes it difficult to ensure direct comparisons, but that does not mean we won’t try to evaluate from countries one has knowledge of.

According to information regarding China, only one third of the existing labour force (around 240m) will get a basic state pension. The others (500m) have nothing. 3. Under the old system based on Chinese agriculture and the lack of contraceptives and urbanisation, Chinese families had more than one child and the children would look after the parents at a later stage. Since the 1950s, China started to adopt a western style pension system where contributions made today by workers pay for those receiving retirement, which was set at 60 for men and 55 for women.

The onslaught against pensions is now entering centre stage in the USA as well with Obama’s Multiemployer Pension Act of 2015. After the massive increases in health care contributions to fund basic health care for the millions of new migrants in the USA, raiding pensions or reducing their payouts is now the new normal. After all evidence has surfaced that because the USA never had universal health care like in most of the EU, its insurance based system led to many in their 60’s going bankrupt when diagnosed with an illness that went over the insurance time limits. The bankruptcy of Detroit as well signalled big pension cuts to retirees, Greek style. 4.

Pension Reductions by Syriza… Neoliberalism in Practice

Syriza pre-electoral promises were that pensioners would be given a return to their Xmas and Easter bonus cut but instead we received five new pension cuts by Syriza in its first year in power and now the big debate is whether to cut all pensions again downwards or tax the last remaining productive sectors to extinction.


Tsipras lyingly declared “We have no aim in moving towards the 12th reduction in main pension” notes journalist N Bogiopoulos. “Can Tsipras count he adds?


a) From the 1/7/2015 (law 4334/2015) the main pensions were reduced by 2% due to the increases in ‘support of healthcare’. This was the 13th reduction after the previous 12 reductions by New Democracy and PASOK. Syriza made it.


b) From 1/9/2015 we are implementing a new way of calculating pensions which leads to reductions of the main pension by more than 2-3%. This was the 14th reduction made by Syriza


c) With law number 4336/2015 there is a 10% reduction to all those who want to get a reduced pension due to their retirement age. Take an insured woman with a 700 euros full pension and 20 years insurance as an example: if she chooses a reduced pension, at 62 she will receive a 420 euros basic pension, (a reduction of 40%), until she reaches age 67 where she will receive 490 euros. Many people in the public sector have chosen early retirement for a variety of factors such as health issues, increased work due to cuts in services or a loss of job as the company collapses. This is the 15th reduction made by Syriza


d) With the Haikalis memorandum (who was a minister in the first Syriza government), laws which were to be abolished by Syriza (such as the reduction of the basic pension from 486 to 392 under the 2nd Bailout) would no longer apply. This will be the 16th reduction by Syriza.


e) According to law num. 4336/2015 the section between the organic pension and the lowest pension is being reduced. This is the 17th reduction, made by Syriza. There were around 100 different work pension funds depending on the type of work one did and too many classifications to be able to explain the minutiae of everything.


f) According to the 3rd Bailout it dictates the immediate abolition of the EKAS pension by 20% and its total abolition by 2019. This is the 19th reduction made by Syriza.


g) According to 3rd Bailout the basic pension at E492 is frozen till 2021. That’s the 19th reduction.” 5.


The basic Greek pension is E492 without a housing component and for farmers it is around E360. The basic UK pension is £650 with a housing component if one has no private housing (for London reaches £1350pcm for a 2 bed flat). Translated to Greece the minimum amount when converted at the time this article was written (£1=E1.3) means the minimum income for a British pensioner (whether they have worked 35 years or not) is E2600 in other words a Greek pensioner will receive 1/5 of that after 35 years work as a basic pension. So when one looks at Eurostat figures and concludes Greece has the highest pension payments as percentage of GDP that is as usual being (neo)liberal with the truth.

If applied now to a Bulgarian citizen whose pension is only E100 (ie 1/5 of the Greek minimum and 1/25th of the UK basic pension) one sees again that the EU is a basket case of disparities which are then abused as there are hundreds of cases eg. of Bulgarian citizens (not only) arriving in Greece in the last decade working a bit, paying Greek national insurance contributions then transferring their pension over from Bulgaria to claim the basic Greek minimum state pension or from Albania where they claimed they minimum OGA (farmers pension) for a whole host of relatives. There are so many such cases that that would require a separate study.

Greeks had essentially two types of pension funds (state and work based). The work based pension funds were invested first in the late 1990’s in the stock market bubbles created by Wall St and its local appendages. Then they were invested in expansion of Greek businesses in the Balkans (banking, telecoms etc.) then they were cut by PASOKs Venizelos in the infamous PSI (organised by Wall St again) and most of the funds were merged into IKA (state insurance) ie. centralised. So despite a near 40 year contributions to work based pension funds they were looted dry. This wasn’t a particularly Greek phenomena. Banksters took money which pension funds had invested in Greek government bonds (E20billion) and they also took fat commissions. 6

According to Max Keiser on RT, Goldman Sachs was involved in creating CDS (insurance backed derivatives) for shareholders of a large trucking company in the USA. If the company went bust these same shareholders would make more money so they had a direct interest despite being owners of the company, in driving it to the wall. As it was the Teamsters they were able to stop Goldman Sachs in their tracks. 7


EU Disparities and Bootleg Labour

During the era when capitalism had actual growth and many were employed in unionised work where wages used to go up from year to year workers contributed inevitably into the state pension system. With the growth of part time non-unionised agency contract labour and the massive growth in cash in hand or bootleg labour (Greece had massive influxes of this type of labour in farming, hotel work and building for instance) money isn’t going into pension funds and as such they are in a negative position. Raiding pension funds to fund private sector business expansion or to pay fat cat bankster bonuses has also led to a situation whereby pensions are now a dream for those in their 20’s in particular when 50% of the youth are unemployed. There is a general feeling that the youth won’t get any pensions or there is no point in asking for pensions.

Without real jobs paying real wages no society can have a pension system worthy of its name that is beyond evident, but then again the disparities in income amongst the wealthiest individuals on the planet and the rest of the planet are also evident but what appears to be evident has no meaning in our times. When it comes to neoliberal ideology logic goes out of the window. There is no point as a previous Minister of Health Loverdos (PASOK) once said in living too long, that is the problem of pensions in a nutshell. The politician who says these things are pensioned off after serving two terms in Parliament and so are all the union bosses after two terms as general secretary. Hence they never support real change in anything as rocking any boat may imply they lose their benefits.

With disparities in the EU where minimum pensions eg. in Bulgaria are E100 and in Luxembourg for instance are E1400 ie. by a margin of 1/14 its no wonder that the EU is a total mess and the real agenda isn’t for Bulgarian pensions to become like Luxembourg’s but the other way down. As with everything else in the EU’s neoliberal free for all, it’s a race to the bottom. 8




Notes


1. Latin American systems https://www.globalpolicy.org/component/content/article/209/43228.html#1


2. Unsustainable Futures Greece Pension Dilemma Explained http://www.theguardian.com/business/2015/jun/15/unsustainable-futures-greece-pensions-dilemma-explained-financial-crisis-default-eurozone


3. Chinese Pensions http://www.clb.org.hk/en/view-resource-centre-content/110107


4. Cuts to Detroit Pensions go into Effect https://www.wsws.org/en/articles/2015/03/03/detr-m03.html


5. http://www.enikos.gr/mpogiopoulos/362334,Syntaxeis-Oi-yposxeseis-axizoyn-oso-axizoyn-ekeinoi-poy-tis-dinoyn.html


6. PSI Euro 20 billion looting of Greek pension funds organised by Troika http://greece.greekreporter.com/2015/06/24/thoughts-on-new-greek-austerity-proposal/


7. How the Teamsters beat Goldman Sachs


http://www.counterpunch.org/2010/01/08/how-the-teamsters-beat- goldman-sachs/


8. Minimum monthly pension Luxembourg E1400 http://www.pensionfundsonline.co.uk/content/country- profiles/luxembourg/95

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