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Response to girl gone mad (Reply #80)

Mon May 7, 2012, 05:23 AM

84. Greece's generous pensions What makes Germans so very cross about Greece?

 

It is not only that our EU partners are angry about our lying to them (and to ourselves) about the state of our finances, nor is it only that they will have to help us politically or economically (or both), but there is also the rather damning fact that in many aspects the Greeks enjoy a more privileged life than their German partners in the EU. Through all this borrowing, Greek salaries and pensions rose far above (about 30 percent) Greek productivity. This means that even if salaries in many cases (though not all) were still lower than the German equivalent, pensions were higher, and usually paid at an earlier age. So there is no longer a feeling of the richer EU countries helping their poorer partners – Greece’s mess comes across as exploitation of the underprivileged by the pampered.
Actually, even this frank analysis has skated over some still nastier gulfs of understanding and misunderstanding. Because the outside world looks at Greek pensions and sees a mess of special interest groups securing unaffordable pensions from successive governments, more or less as electoral bribes. (There have been special pension deals over the years for civil servants, for Olympic Airlines staff, farmers, wives of farmers, employees at the National Bank of Greece, even I am told hairdressers, the list is very long).

But seen from the perspective of ordinary Greeks, it has not felt so cosy as all that. If the pension scheme is utterly broke, it is not just because of greedy Greeks.

This devastating academic study details how many Greek state bodies failed to make the correct contributions for their employees, in some cases for years. Then the Greek central government "essentially appropriated" social insurance funds by investing them in state securities or depositing them in the Bank of Greece at low interest rates. Finally, as in many Mediterranean countries, all social spending was skewed towards pensions, essentially for vote-winning purposes. Things like unemployment benefits are pretty miserly in Greece, the real money has always gone to pensions, which have been used as a "substitute" for other welfare policies.

http://www.economist.com/blogs/charlemagne/2010/02/greeces_generous_pensions

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