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Social Security (Minimum Standards) Convention, 1952 (No. 102) - Greece (RATIFICATION: 1955)

Other comments on C102

Observation

Direct Request

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Recalling the conclusions made in its observation of 2012 and having examined the information provided by the Government in 2013 in its report on the Convention and in the 31st annual report on the application of the European Code of Social Security (thereafter the Code), the Committee finds that the continuing contraction of the economy, employment and public finances caused by the policy of continuous austerity threatens the viability of the national social security system and has resulted in the increased impoverishment of the population, which seriously undermines the application of all accepted Parts of the Convention.

Protecting the social security system against continuous austerity. The Committee observes that after six straight years of recession and four years of austerity policies, the country has been led to an economic and humanitarian catastrophe unprecedented in peacetime: a 25 per cent shrinking of GDP – more than at the time of the Great Depression in the United States; over 27 per cent unemployment – the highest level in any western industrialized country during the last 30 years; 40 per cent reduction of household disposable incomes; a third of the population below the poverty line; and over 1 million people or 17.5 per cent of the population living in households with no income at all. These consequences are substantially related to the economic adjustment programme Greece had to accept from the group of international institutions known as “the Troika” (the European Commission, European Central Bank and IMF) to ensure repayment of its sovereign debt. The above statistics show that the policy of continuous austerity has plunged the country into a spiral of continuous recession, lost GDP and employment, higher public deficits and debt. With regard to future economic prospects, the report on the Convention includes the 2013 survey of small enterprises with up to 49 employees, constituting 99.6 per cent of Greek enterprises, conducted by the Small Enterprises’ Institute of the Hellenic Confederation of Professionals, Craftsmen and Merchants (IME GSEVEE). This survey reveals that 76.5 per cent of entrepreneurs and the self-employed believe that the crisis is deepening and have lost all hope for recovery. In absolute terms, 110,000 enterprises are “in the red”, with 40,000 of them estimated to close down over the next 12 months; total job losses in 2013 will reach 85,000–90,000; 63.3 per cent of enterprises estimate that they will not be able to meet their tax obligations in 2013; 57.2 per cent say the same about their social security obligations, while 22.6 per cent already owe contributions to IKA–Social Security Institute (a 30 per cent increase in only six months). The Committee observes that such economic outcomes of the fiscal consolidation programme undermine the viability of the national social security system and negate the very objectives of social protection pursued by the Convention and the Code. The Committee of Ministers of the Council of Europe, in its Resolution CM/ResCSS(2013)21F on the application of the European Code of Social Security by Greece, regretted that “the evolution of the situation in Greece confirms its previous conclusion that applying exclusively financial solutions to the economic and social crisis could eventually lead to the collapse of the internal demand and the social functioning of the State, condemning the country to years of economic recession and social unrest”. The Committee observes that under the present circumstances, by maintaining the course of austerity, the Government is, to a large extent, forfeiting its general responsibility for the proper governance of its social security system, which extends throughout all the provisions of the Convention and the Code. In view of the new austerity measures in Greece scheduled for 2014, the huge deficit of the country’s main social security fund, IKA, in conditions of mass scale non-payment of taxes and social security contributions, and the fact that many benefits have fallen below the poverty threshold, the Committee considers that the Greek Government and the Troika should be called upon to prevent the collapse of the social security system in Greece and to sustain the social functioning of the State at least at a level to maintain the population “in health and decency” (Article 67(c) of the Convention and the Code). The Committee notes in this respect that in June 2012, the Parliamentary Assembly of the Council of Europe called upon the States parties to “closely assess current austerity programmes from the viewpoint of their short- and long-term impact on democratic decision-making processes and social rights standards, social security systems and social services” (Austerity measures – a danger for democracy and social rights, Resolution 1884(2012) of 26 June 2012, paragraphs 10.3 and 10.6). The Committee further notes that, in October 2013, the Committee of Ministers invited the Greek Government to ask the National Actuarial Authority to assess the overall impact of the austerity policies on the sustainability of the social security system. The Committee would therefore like the Government to respond to these recommendations of the Council of Europe by conducting such an assessment of the current austerity programmes, preparing the necessary policy corrections and applying them without delay with a view to preserving the immediate viability and the longer term sustainability of the national social security system. The Committee hopes that the participation of Greece in the European working group on “Efficiency and effectiveness of social spending and financial arrangements”, to which the Government refers in its report on the Convention, will help the Government to assess the effectiveness of its social spending sufficiently in time to arrest the destructive effects of the present financial arrangements.

Stopping the increasing impoverishment of the population. The Committee highlights that the following considerations concern some major developments affecting benefits in 2013 and should be read in continuation of its previous conclusions concerning the impact of austerity measures on poverty levels in Greece in 2012. Referring to austerity measures implementing the Memorandum of Understanding on the Medium-Term Fiscal Strategy 2013–16 (Memorandum III) between the Government of Greece and the IMF, the European Commission and the European Central Bank, the 31st report on the Code states that, as of 1 January 2013, by Law 4093/2012, the amount of monthly pension or the sum of monthly pensions of €1,000 and above were reduced by between 5 and 20 per cent. Also from 1 January 2013, the Christmas, Easter and holiday bonuses were abolished, meaning an additional 6 per cent reduction in annual income from pensions of IKA–ETAM. The report on the Code also states that 910,048 IKA pensions (out of a total of 1,205,513 computerized pensions), which are lower than €1,000, were decreased by 1 per cent after all the deductions, excluding the Christmas, Easter and holiday bonuses. Besides direct cuts in pensions, further financial savings from the pension system were generated by reducing the number of recipients through imposition of stricter qualifying conditions in terms of higher retirement age and income criteria. Thus, the stricter conditions for the entitlement to old-age pension set by Law 3863/2010 that were supposed to come into force on 1 January 2015 were applied from 1 January 2013, increasing from 65 to 67 years the retirement age for pensions provided by the Social Security Funds under the competence of the Ministry of Labour, Social Security and Welfare, as well as the Bank of Greece. According to Law 4093/2012, from 1 January 2014, in order to be entitled to the Social Solidarity Allowance (EKAS) the recipients of old-age, invalidity and survivors’ pensions should reach the age of 65 (instead of 60), with the exception of surviving children. By Law 3996/2011, EKAS is subject to the new income test, which now covers the entire income, including profits and earnings from room renting, truck renting, personal business, sales as travelling salesmen, etc. The non-contributory pension of €360 (€345 net) financed from the state budget and granted by the Agricultural Insurance Organization (OGA) to uninsured persons of old age who do not receive any other pension, provides, since 1 January 2013, for more stringent age, residence and income conditions, which need to be met cumulatively. Nevertheless, according to the report on the Code, there are still 779,661 pensions (with an average monthly amount of around €483.18) that have not been subject to any monthly decrease since 2011. No reductions were made to the minimum pension for old age and disability (€486.84 for persons insured before 31 December 1992, and €495.74 for those insured after 1 January 1993) and for survivors (€438.16 for persons insured before 1992 and €396.58 for those insured subsequently), as well as to EKAS, which constitutes an amount from €30 to €230 (average is around €175.62).

While noting the Government’s efforts to shield low-income pensioners from new reductions, the Committee observes that existing thresholds and safeguards are largely insufficient to prevent poverty in old age: the report on the Convention indicates that the rates of relative poverty and the material deprivation for people over 65 have worsened more than for the population on average, and that this phenomenon requires monitoring. The Committee hopes the Government understands that the aim of monitoring poverty is to reduce it, which cannot be achieved by new pension cuts. The Committee observes that, direct pension cuts in 2013 resulted in a reduction of pensions ranging from 12 to 27 per cent in total. The impact on the population would be greater if one considered also the effect of the introduction of much stricter legal conditions for entitlement to various pensions. The European Committee of Social Rights stated in this respect that “the cumulative effect of the restrictions … is bound to bring about a significant degradation of the standard of living and the living conditions of many of the pensioners concerned” (Complaint No. 76/2012, Federation of employed pensioners of Greece (IKA–ETAM) v. Greece, Decision on the Merits, 7 December 2012, paragraph 78). One might add to this that pension reductions now constitute one of the main remaining sources of budgetary savings that Greece promised to its international creditors in 2013: about half of the €9.37 billion budgetary savings affects pensions. The Committee is saddened to observe that the aggravation of poverty in Greece is not a natural but an artificially created phenomenon perceived as inevitable “collateral damage” to fulfilling the country’s financial obligations before its international lenders. This Committee fully shares the conclusion of the Committee of Ministers of the Council of Europe that a State ceases to fulfil its general responsibilities for the proper management of the social security system and the due provisions of benefits if its social security benefits slide below the poverty line, and would be seen as socially irresponsible if its social security benefits fall below the subsistence level. In the light of these conclusions of the Committee of Ministers, the Council of Europe, as a human rights institution, has the legal and moral grounds to hold the Greek Government and its international lenders responsible for the “programmed” impoverishment of the population and the human costs it involves. With respect to the position of the Greek Government, the Committee considers that the adoption by the Government of the socially responsible policy would imply, inter alia, the fulfilment of the following requests made by the Committee in its previous observation and restated by the Committee of Ministers in its 2013 Resolution on the application of the European Code of Social Security by Greece: (1) to urgently assess past and future social austerity measures in relation to one of the main objectives of the Convention and the Code, which is the prevention of poverty; (2) to put this question on the agenda of its future meetings with the parties of the international support mechanism for Greece; (3) to enable the National Actuarial Authority, in terms of additional financial and human resources, to analyse the redistributive effects of benefit cuts; (4) to determine the most rapid scenarios for undoing certain austerity measures and returning disproportionately cut benefits to the socially acceptable level; and (5) to make full use of ILO technical assistance to support the quantitative analysis of these options and of the subsequent revision of the 2012 actuarial projections for the national pension system. According to the report on the Code, the General Secretariat for Social Security of the Ministry of Labour, Social Security and Welfare has forwarded these requests of the Council of Europe and the ILO to the Government and expects the political leadership of the country to take relevant decisions.

The Committee, for its part, hopes that these decisions will be socially responsible and will be forthcoming sooner rather than later, if only considering that since the beginning of austerity the country has been shaken by no less than 39 general strikes. With respect to the proposal to assess the impact of austerity measures on poverty, the Committee finds it encouraging that, in its report on the Convention, the Government refers to the analogous conclusion coming out of the Social Protection Committee of the European Union, namely that member States implementing economic adjustment programmes should assess the social impact of measures prior to implementing those programmes. The Government cites point 7 of the policy conclusions of the report of the above Committee addressed to the European Commission and the European Council for the preparation of the Annual Development Report, which states “Member States implementing economic adjustment programmes (EAPs) have shown an extraordinary commitment to reforms which are painful for their population. Their experience offers a unique source of lessons to be learned. Many of the implemented measures strengthened their social protection systems, while others failed to halt the rise of poverty and in particular child poverty. Social impact assessment must therefore precede the economic adjustment programmes in order to choose the most appropriate path of reforms and adjust the resulting distribution impact across income and age groups.” As a first step towards binding measures decided upon at European level to that effect, the Government refers to the pilot ex ante examination of sectoral economic reforms in the Member States based on the proposal submitted by the European Commission for “ex ante coordination of plans for major economic policy reforms” (Communication, 2013) following its authorization by the EU Summit. The Committee is pleased that the repeated calls of the Council of Europe and the ILO to conduct structural adjustment programmes in a socially responsible manner avoiding large-scale pauperization of significant segments of the affected populations have been heard and acted upon by the European Commission. Considering that the European Commission forms part of the Troika, the Committee trusts that the Greek Government will not fail to seize the opportunity of using the above ex ante examination of its economic reforms to conduct the post factum examination of the impact of those reforms and the policies of continuous austerity on the rise of poverty and in particular child poverty. The Committee wishes to underscore that such an assessment will no doubt offer “a unique source of lessons to be learned” not only by the European Commission and other members of the Troika, but by all European countries and the international community at large in order to prevent, in future, the creation of widespread poverty.

Establishing a national social protection floor. With respect to the role of the social security system in poverty reduction, the Committee recalls that Greece continues to be the only Eurozone country with no basic social assistance scheme that provides a safety net at the subsistence level determined in terms of the basic needs and the minimum consumer basket. The report on the Convention explains in this respect that the question of indicators based on categories of goods and services is being discussed at the European Union level, where there is no agreement among Members States on the methodology for the elaboration of such indicators that is subject to the Peer Review on “Using reference budgets for drawing up the requirements of a minimum income scheme and assessing adequacy”. However, in the framework of the European Strategy “Europe 2020”, Greece has committed itself to building a social safety net guaranteeing access to basic services and fixed specific quantitative targets for the reduction of poverty and social exclusion in the National Reform Programme: by 2020 the number of people at-risk-of-poverty or material deprivation or living in households with no working member should have been reduced by 450,000 (from 28 per cent in 2008 to 24 per cent in 2020); and the number of children at-risk-of-poverty by 100,000 (from 23 per cent in 2008 to 18 per cent in 2020). In monitoring trends in poverty, the Government is focusing on persons who experience extreme poverty and the unemployed. For the first group, Law 4093/2012 established a pilot programme to set up a minimum guaranteed income scheme, which is being prepared in cooperation with the World Bank and, in the first phase, will be applied in two Greek regions with different socio-economic characteristics. With regard to the unemployed, the Government started discussions with the Troika and intends to revise the benefit for the long-term unemployed. The Committee welcomes these initiatives which commit the World Bank and the Troika to taking into account the urgent needs of the people concerned. The Committee considers that in the present situation the establishment of the basic social assistance scheme, in line with the Convention, becomes an urgent necessity and would like the Government to refer in this respect to the ILO Social Protection Floors Recommendation, 2012 (No. 202). It hopes that in establishing such a scheme and determining the guaranteed minimum income, as well as the amount of the benefit for the long-term unemployed, the Government will rely not only on the poverty indicators, but will ensure that the established minimum amounts remain in all cases above the physical subsistence level for different age groups of the population.

[The Government is asked to supply full particulars to the Conference at its 103rd Session and to reply in detail to the present comments in 2014.]