Greece: Welfare Bodies Close to Bankruptcy

Mar

tagged: collapse, Greece, insurance funds, welfare

Greek Crisis: Welfare Bodies Close to Bankruptcy

Posted by keeptalkinggreece in Economy, Society

“ The financial situation in which Greece’s national insurance bodies find themselves is, to say the least, very serious. The organisations are the victims not only of the serious economic crisis in which Greece finds itself but also of the two-party system that has ruled the country for years and that has been unable or, perhaps through nepotism, has been unwilling to tackle the problem of these bodies and to reduce their deficit to the levels of other European countries. The first opportunity to do so came during the years of the Socialist government led by Costat Simitis, when the then Employment Minister and current Interior Minister, Tassos Gianitsis, attempted a reform of the national insurance system, which was blocked in its embryonic stage by the party and union mechanisms of Pasok, the party led by Simitis.
The same befell the centre-right government of Costas Karamanlis, which, in order to tackle the problem, was able only to increase tax contributions for national insurance companies, taking contributions up from around 5 billion euros during the final year of the Simitis government to almost 15 billion in 2009, the last year of the New Democracy government.
From 2000 to 2010, when the crisis began, state contributions to national insurance bodies have exceeded 121 billion euros. A typical example of the current situation in which the system finds itself is that of the Organisation of Maritime Workers (NAT), who often protest against the potential incorporation of their body into the new national system. The NAT is today financed by the contributions of only 15,000 workers, but is expected to guarantee a pension for 75,000 people.
The economic crisis has made the situation worse. Tax evasion, an increase in unemployment, the closure of many companies and the haircut on bonds owned by them have caused a “black hole” of nine billion euros for 2012, according to the work institute of the trade union General Confederation of the Workers of Greece (GSEE),with the risk that it may not be able to meet its commitments for the last quarter of 2012. Savvas Rompolis, the director of the GSEE’s work institute, says that with unemployment alone, which by the end of 2012 will reach 23-24% (around 1.2 million people), national insurance bodies will lose more than 6 billion euros. Greece’s main national insurance institution (IKA) has already been forced to use half of its state contribution in the first two months of 2012, one billion out of the two billion recorded in the state budget for the whole of 2012.
Debt towards national insurance bodies currently total 11 billion euros, of which only 7 billion can be recovered, according to the Minister for Employment, Giorgios Koutroumanis.
The organisations have a total of 800,000 debtors. One in every two people assisted by the Body of Professionals (OAEE) and one in three assisted by the Farmers’ body do not pay due tax. More generally, tax evasion stands at 6 billion euros, with control mechanisms unable to tackle the problem efficiently. The issue of corruption also plays a part. Since the state control mechanism recently came into force, it has emerged that thousands of people on supposed “invalidity” benefits have been receiving money without having the necessary pre-requisites. People registered as blind were found to be driving tractors or taxis, while doctors were found to have prescribed 7,000 days of sick leave to immigrants who regularly earned benefits as they worked. Others continued to receive the pension of parents who had been dead for some years.
Estimates from the Ministry of Health say that once current checks are complete, more than 70,000 people will be found to have received benefits to which they were not entitled. In truth, there are also other problems at the root of the serious economic situation being faced by national insurance bodies. Also to be considered is the significant squandering of money by the organisations themselves, which very year spend millions of euros on renting property for their offices while there are more than 20 buildings in Athens that are owned by the organisations and remain unused. ” (ANSAmed).