Labour Minister Yiannis Panayiotou announced on Tuesday that the 12 per cent penalty imposed on pensions taken two years before the legal retirement age of 65 cannot be abolished. If it were, he said, it would, in effect be reducing the retirement age to 63, something that would increase the annual cost to the social insurance fund by €100 million a year.
He made the statement of the obvious while the social insurance council was discussing the decision with the social partners. What they were discussing is unknown, considering Panayiotou announced the government’s decision on the matter last Friday. According to the decision, some 11,000 people who had retired at 63 would see their pensions increase by about €800 a year as long as they had contributed to the social insurance fund for 40 years. The main beneficiaries would be people who had been doing physical work for many years, like construction workers.
This seemed a relatively sensible arrangement, given that the government had needlessly agreed to look into the pension penalty, at the behest of the unions. There is no point saying the unions were not happy with the government’s decision that would benefit one third of the early retirees getting a reduced pension and about 1,000 to 1,500 each year. While Peo had some reservations about low-income earners, the Sek boss said the decision discriminated against two thirds of workers. It was a diplomatic way of saying it wanted the penalty scrapped and the retirement age brought down to 63.
Panayiotou, who has shamelessly pandered to the union bosses from the first day he took over at the labour ministry, said that “through the evolution of the discussion there is the potential to forge the necessary consensus that would allow us to proceed to the next steps.” In effect, the government wants the unions to rubber-stamp the decision that has already been taken and for which there is no room for negotiation. As Panayiotou said, if the reservations expressed by some unions “stem from a different philosophy on the substance of the matter, it would be difficult to bridge the differences.”
In other words, the unions are faced with a take-it-or-leave-it offer, which the minister has presented in fine words so as not to be accused of acting arbitrarily. This is also the reason he has engaged in discussions with the unions for one year, to arrive at the decision he had hinted at all along. Panayiotou said he hoped the discussions could be completed soon so that before the end of the year the change could be made to the legislation. What is the point of the discussions for supposed consensus when the decision has already been costed and finalised by the government?
Is it a way of letting down gently the union bosses who have become accustomed to always getting their way?
