By G. Kampourakis
[email protected]
Political speculation in Athens this week, at least on the domestic front, centered on the upcoming cuts in social security spending, an austerity measure agreed to with creditors as far back as May 2017 and set for implementation on Jan. 1, 2019, but with the poll-trailing Tsipras government nevertheless insisting that it’s negotiating – or will negotiate – a suspension of the decision.
The overall reduction in social security spending from the specific measure is now calculated at 3.2 billion euros, a figure specifically cited in a finance ministry circular issued this week and bearing the signature of the alternate finance minister.
However, with ruling leftist SYRIZA party trailing the main opposition by double-digit percentage points in practically all mainstream opinion polls for more than a year now, and with the right-wing junior coalition party’s approval ratings having reached a nadir, a bevy of ministers and party cadres took to the airwaves to claim that “negotiations” would commence in September over a possible suspension or even abolition.
The leitmotif uttered by government sources is “don’t be hasty”, while dismissing the impact of the circular, saying the latter is merely an “obligation” as part of the framework of the mid-term fiscal readjustment program – another memorandum-mandated requirement undertaken by whatever government is in power in Athens.
The “spin” out of the Maximos Mansion government headquarters, the finance ministry and Parliament’s corridors was that the Tsipras government is not abandoning efforts to postpone the next round of pension cuts, although efforts to reach an understanding with the country’s institutional creditors “will manifest itself at the proper time”.
Conversely, the “fallout” from the circular’s publication further dented the government’s sagging popularity, given that the figure of 3.2 billion euros in reduced social security spending is nearly double than what a relevant May 2017 law prescribed – i.e. lower pension spending by the state to the tune of 1.8 billion euros.
Two explanations emerged in this case: either finance ministry experts at the time miscalculated and under-estimated the amount that would have to be cut, or, an effort is underway to accumulate an even bigger primary budget surplus (as a percentage of GDP) in 2019. An over-performance in terms of meeting fiscal targets would, or so the political “scenario” goes, allow the Tsipras government the opportunity to negotiate with creditors over its distribution, possibly in the form of an extraordinary “social dividend” doled out lower socio-economic strata, which in the previous two elections formed the electoral backbone of the radical leftist and once anti-austerity SYRIZA party.
“We’re in the ‘unpleasant’ position of saying that we’ll negotiate a postponement of the pension cuts measure, but with a high probability of not actually implementing it,” was the Delphic statement by SYRIZA’s parliament group director, Costas Zachariadis, who spoke on a news program on Thursday.
“The cuts in pensions are not necessary… the (austerity) procedure, in order to be implemented, is continuing as planned… a law changes with another law,” was the way Alternate FM Giorgos Katrougalos tried to explain his government’s dilemma. Katrougalos was the labor and social insurances minister when the law stipulating the 2019 social security reduction was passed by the coalition majority in 2017.
