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If pensions and salaries at €750 gross, prices for good & services have to be decreased accordingly

The great pensions slaughtering. Ops! In creditors’ language we call it nicely “the great pensions reform”. Labor Minister Giorgos Katrougalos submitted the Greek government proposal in an e-mail file containing 170 pages. the creditors’ received it and are reportedly evaluating it. As Katrougalos’ proposal was leaked to the press, the government is in direct confrontation with the whole of the opposition that vehemently rejects the SYRIZA-ANEL coalition proposals.

the opposition does not want any further cuts in main and/or supplementary pensions. However it has no proposals other than political bubbles on how to rescue the pensions in general and avoid the total collapse of pension funds in particular.

Summarizing Katrougalos’ pensions proposal, we can see that it will be the new pensioners (current workers, youth etc) who will see dramatic cuts in their near and far future pensions. The government insists that the current pensions will not undergo further cuts. although Greek media predict that “after 2018 also the current pensions over 750 euro will be trimmed down.”

The overhaul of the Greek pension system foresees a two-tier pensions system:

a basic “National Pension” of €384 gross per month for those who have worked at least 15 years

PLUS

an additional pension based on the total amount of contributions paid by the insured worker, self-employed, free-lancer etc.

That’s the general formula for the future pensioners.

The new pensions of 750 euro are expected to undergo cuts of 15%, while those of 2,000 euro the trimming down will be 30-35%.

Those in early retirement will not receive the full amount of 386 EUR of National Pension but only a proportion of it.

By 2019, all 120,000 low-pensioners who now receive the low-pensioner allowance (EKAS) will have to find other ways of survival, as the EKAS will be banned and deleted by creditors’ order.

The pensions calculation will not be based on the salary of the last 5 years (as until today) but it will be based on the “average income of all working years.”

Given the fact wages and salaries underwent dramatic cuts since 2010 and the minimum wage went down from €780 gross to €580, it is more than obvious that pension calculation has to be not only adjusted accordingly but also being cut drastically.

Minimum wage is 580 gross and 480 gross for those below 24 years old.

Salaries of some €2,500 gross in 2010 went down to €1,000 after 2014.

A high skilled IT man of 30-35 years old may be hired at €1,000-1,500 gross nowadays. In the average he may have being unemployed for 3-4 years – lost years for the pension right.

However, long-term employment contracts are rare, part-time work flourishes, ‘black labor’ without social contributions seems to spread like a virus. The majority of  salaries I hear from young ones or older generations who have been long-time unemployed is between €580-€750 gross per month for full time jobs.

Part-timers’ salaries are at €250-€280 with just one social insurance stamp per month, if any at all.

The Greek reality is triste for the workers and the social security funds and therefore for the pensions as well.

According to several calculations of the new pensions system:

average salary of 1,000 for 35 years of work will give a pension of 776 (old pension 881)

With the hazardous unemployment rates of the last 6 years, I wonder who will manage to go into full retirement with 35 or 40 years of work at the age of 67.

But this is not the point. the point is that:

As salaries are and pensions will be at €750, the prices for goods and services as well as the taxes and Value Added Tax have to decrease accordingly.

Bread should go down to 0.30 from 0.80 nowadays, milk at 0.50 from 1.10, transport tickets to 0.40 from 1.20 nowadays and 1.40 in very near future, as planned. Fuel prices should also be decreased by 50%, the same as electricity as well as the cost of other basic needs. Patients’ self-participation in health care expenditure should be scrapped.

Because, you cannot have a permanent internal devaluation with dramatic cuts that make surviving impossible, but have a permanent increase of prices for goods and services nevertheless due to non-stop hikes in Value Added Tax, while the welfare state has vanished in the air the creditors’ breathe.

People do not want to live on charity and much-praised solidarity actions, eat at soup kitchens, get second-hand clothes for free but being unable to cover their basic monthly needs like paying their rent, their heating oil, and oh, surprise! they need a telephone as well!

PS Ops! I though we had a left-wing government that cannot even persuade the banks to decrease their commission for POS-device charges and cannot even pass a law to force them to do so.

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2 comments

  1. NotAfraidAnyMore

    If we don’t do as Iceland did (and who cares about the damned euro anyway, it’s not helping us any, is it?) and REPUDIATE the debt which was created to BAIL OUT GERMAN BANKS but not for the people of Greece, immediately after which we PROSECUTE the BANKSTERS and any POLITICIAN who helped them put us in this mess, then we should at the very least beging to use crypto currencies and start our own economy and to hell with the goverment, the “institutions” aka troika and and anyone else not acting for OUR benefit.

  2. George Kanakaris

    A catastrofe.