No country for old Greeks

News

On 4 February, tens of thousands of people took to the streets of Greece in one of the biggest demonstrations to take place since the left-wing Syriza government came to power over a year ago. They were protesting against the overhaul of the country’s pension system and a proposed increase in taxes.

The pension overhaul – part of the country’s new belt-tightening reforms which stem from the latest economic bailout agreed last July between Greece and its creditors after six months of tough negotiations – is becoming the government’s greatest challenge to its political survival.

Vociferous opposition to the reforms is putting pressure on Prime Minister Alexis Tsipras, who was elected by the Greeks for his anti-austerity promises and firm opposition to further pension cuts.

It is still unclear when the bill will be introduced to the parliament.

But with only a three-seat majority, Tsipras was forced into a dramatic policy change in order to appease international creditors, at the expense of thousands of Greeks who will be affected by the pension system reform.

“We cannot live with dignity anymore. They have taken everything from us and Tsipras should be ashamed for lying to the Greek people,” Giorgos Andreadis, a retired school teacher from Athens, tells Equal Times.

“I cannot even afford to pay for my basic needs, such as food and heating,” says pensioner Leda Giannakopoulou, who still supports two of her adult children since they lost their jobs three years ago.

The opposition to the pensions overhaul has been unanimous, bringing together a disparate group of professions, including blue-collar and white-collar workers. Doctors, engineers and lawyers – many in their suits and ties – joined the protests alongside farmers, taxi-drivers, seamen and builders, an action that has become known as the “necktie movement”.

“The situation is getting worse every year,” says retired lawyer Nikos Athanasiou, whose 35 year-old daughter, a physicist, recently moved to the United Kingdom in search of a better future after two years of unemployment.

“At the end of each month, after I pay my taxes and my bills, there is almost nothing left from my pension to survive on,” he says.

The most recent Eurostat data shows that the country has around 2.6 million pensioners, with an average pension of €882 (US$963) per month, down from €1,350 (US$1,474) in 2009.

According to the Greek General Confederation of Labour (GSEE), 45 per cent of the retired population receives a pension of less than €665 (US$726).

“There needs to be an organised reaction to ensure the redistributive function of the pension system that the government is trying to tackle with budgetary reforms,” said GSEE’s president Giannis Panagopoulos.

 

“I worked so hard my whole life”

Greece has promised to cut pension spending by €1.8 billion this year, under the terms of the new bailout, but Tsipras’ government has proposed instead to increase social security contributions from employers and employees in order to avoid more austerity. Meanwhile, existing pension funds will be consolidated to reduce administration costs.

As well as making €1.8 billion in savings through pension reforms under the terms of the bailout, the Greek government is also seeking to establish a basic monthly state pension of €384 (US$419), with an upper limit of €2,300 (US$2,510).

From 2016 onwards, new pensioners will have their pensions calculated as if they had always been contributing to the reformed system, rather than to the older system previously in place.

For the majority of workers, this could mean even lower pensions than the current average of €882 per month.

At the same time, Greece’s creditors are pressuring the country to adopt a ‘zero deficit’ system which would end budget subsidies for the pension system and guarantee its sustainability until 2060.

However, this would mean not only across-the-board cuts in both main and supplementary pensions, but also the abolition of a special monthly stipend for pensioners receiving the lowest benefits, as well as an increase in the retirement age from 65 to 67, with penalties for those who choose to retire early.

The overhaul would also put an end to special arrangements that allow working mothers and people in ‘hazardous’ occupations to retire early on full pension benefits. It will merge many sectoral pension funds into three main streamlined funds that will be exclusively financed by workers’ contributions, and not any other source of government revenue.

“I worked so hard my whole life in this line of work, getting up at 04.00 and being on my feet all day until after midnight. How will I be able to do that when I am 67?” says Alexandra Dimakopoulou, a 50-year old hotel maid, whose retirement age as well as her pension are now being reconsidered.

The Syriza government recently announced that hotel maids, along with at least 30 more professions, will no longer be part of the list of ‘dangerous’ occupations.

With the unemployment rate rising to 25.6 per cent in March 2015, Greeks often depend on retired family members to make ends meet, with official government data revealing that one in two households rely solely on pensions to survive, while pensions have been slashed 11 times since 2010.

A report released by the European Commission at the beginning of February, argued that the pension overhaul and new taxes would still not suffice for the country to meet its bailout targets and that further austerity cuts would be needed in 2016 and 2017.

For the moment, Greece remains stuck between a rock and a hard place as the Syriza government must convince creditors abroad that Greece is making enough reforms to receive the next bailout while facing an enormous backlash over the pensions overhaul both from the Greek citizens as well as his own party.

As unemployment figures continue to rise and more households rely solely on pensions to survive, conditions in Greece are riper than ever for social unrest and political fragility.