The benefits structure of the system is the result of several decades of chaos, during which everyone seized what they could, depending on their proximity to the core of the patronage state
It is a great illusion for someone (i.e., in this case, the government and the majority of the opposition) to believe that the intragenerational injustice upon which the pension system is built can continue in perpetuity, so that the respective holders of state power can avoid the resentment of the privileged, who would have been “affected” negatively by a reform that would redefine the amount of remuneration so that it is based on the actual contributions of every citizen during their working life. Everyone knows that the benefits structure of the system is the result of several decades of chaos, during which everyone seized what they could, depending on their proximity to the core of the patronage state. As a result, today, equal contributions provide unequal pensions or unequal contributions provide equal pensions. Given the progressive collapse of the system, these injustices and inequalities will become more and more visible to all, further delegalizing not only the pension system, but also the political system itself. It is for this reason they need to be removed, now!
If the “conquests” of each and every generation are not “conquests” of production efficiency gains but of privileges that do not correspond to the level of real incomes, then the national economy is led to bankruptcy – as was the case in Greece
It is a great illusion for someone to believe that the intergenerational injustice, which is hidden behind the reluctance to reform the pension system, can succeed and smoothly lead the country out of the crisis. It is an illusion, namely, to hope that, in order to avoid the sociopolitical turbulence that a reform would entail, it would be possible to burden the generation of the currently employed with additional contributions, so that the generation of the current pensioners enjoy payments higher than the level of national income they have managed to create. The so-called “conquests” of each and every generation must be “conquests” of production efficiency gains and not of privileges that do not correspond to the level of real incomes. Because then, the national economy is led to collapse and bankruptcy – as was the case in Greece.
The current crisis of fiscal bankruptcy did not fall from the sky. It had its causes, of which the most serious, perhaps, were the excesses in the pension system
It is a great illusion to say that “… it is not possible to resolve the pension system problem, while the country is in recession.” This reverses the relationship between cause and effect. The current crisis of fiscal bankruptcy did not fall from the sky. It had its causes, of which the most serious, perhaps, were the excesses in the pension system. For this reason, the national economy is not going to enter a process of recovery as long as the pension system is in ill health. In today’s economic reality, the macroeconomic stability does not constitute a precondition for the sustainability of the pension system, as argued by those who wish to avoid the bitter pill of reform. What happens is the exact opposite: the introduction of a sustainable pension system is an essential prerequisite for achieving macroeconomic stability and a balanced growth of our economy.
A coordinated, targeted and socially fair reform will probably be the most important step towards both the stabilization and recovery of the Greek economy as well as the substantial commencement of its growth
It was, thus, a major mistake on behalf of the government to reject the conclusion of the “Committee of Wise Men” – set up by the government itself – regarding the reform of the pension system. And it is an equally major mistake on behalf of the opposition to equivocate and evade this issue in order not to become displeasing. Because the truth is as simple as that: pensions will be further reduced in the near future so that they are aligned with the actual capacity of the economy. This, however, could be done in two very different ways: the first is to continue burying their head in the sand and trying to preserve any remaining “attainments” of the chosen few of the patronage state. In this case, the outcome will be the total collapse of the economy. On the contrary, a coordinated, targeted and socially fair reform will probably be the most important step towards both the stabilization and recovery of the Greek economy as well as the substantial commencement of its growth.
In order to give the citizens the feeling of social justice, solidarity and equality it is essential that, besides “national pension”, a pensioner’s income corresponds and is proportional to the contributions they paid during their working life: equal to equals!
The proposition of the “Committee of Wise Men” to introduce a “notional defined contributions” scheme, although it could be further discussed as to some details especially regarding its hesitation in colliding with some well-established pathologies, it is in the right direction because it is socially correct. This is because – in order to give the citizens the feeling of social justice, solidarity and equality – besides “national pension”, a pensioner’s income should correspond and be proportional to the contributions they paid during their working life: equal to equals! It is also practically applicable, considering the conditions of economic crisis and the gradual reversal of the country’s demographic pyramid. It offers many of the advantages of the purely funded scheme, which, however, cannot be implemented under the existing conditions in Greece, as the transition to it would require a very long time and different demographic and economic data from the current one. On the contrary, the suggested scheme could be implemented after a very short and smooth transition period. After all, similar schemes have been chosen and introduced by those developed countries which have reformed their pension systems over the last years.
It is a great mistake for anyone to be unwilling to explicitly and directly advocate the radical reform of the pension system. It is a mistake on behalf of the political parties and the politicians, who try to avoid this difficult but imperative duty by persisting in using the conventional “patches” that cause more problems than they solve. It is, also, a mistake on behalf of those who enjoy the privileges they acquired in the recent and distant past and who delude themselves believing that they can preserve them forever. The hard truth is that if they do not consent to the immediate reform of the pension system the hardships they will suffer from its collapse will be even worse than those they have been trying to avoid.