The field of social insurance has experienced considerable changes in Greece during the reference period, especially from January to December 1997.
Three main areas of action characterise the said period: the creation of a new basic scheme for farmers, the effort expended by the government to legalise the residency and employment of unregistered workers coming from third countries, and the launching of a major social debate by the government on the issues of development, employment and competitiveness, as well as the growing problems of the Greek social security.
The Greek social security system provides for a special insurance scheme for farmers. This scheme is managed by the Agricultural Insurance Organisation (OGA) which was founded in 1961 (Act 4169/61).
The OGA grants old-age pensions to all persons who hold a job in the agricultural sector, while guaranteeing them against risks of invalidity, sickness and death. This special insurance scheme for farmers is characterised by the particularity that namely the financing of the system is essentially covered by fiscal revenue (general or specialised), as well as social contributions, and not by any contributions paid out by the insured themselves. We must point out that the pension awarded to farmers, which is particularly low, is at a set flat-rate sum and takes more the form of a non-contributory benefit. The year 1987 saw the institution of a supplementary insurance branch for farmers (Act 1745/87), whose aim it was to grant, on a contribution-basis (monthly contributions paid by the insured), supplementary pensions to those insured by the OGA and to family members.
It appears that this sector, which nevertheless enjoys financial and accounting autonomy, will become largely deficit-ridden in the near future. After 35 years of operation, the OGA system remains in force, despite striking practically no positive balance and despite the radical changes that have occurred in the social and economic context. Once these facts have been taken into account, it proves indispensable to implement a new social insurance system that will be based on two fundamental principles, namely the principle of the contribution made by beneficiaries and that of the state’s involvement.
Furthermore, the proposed system must ensure a level of insurance to farmers that is at least equal to the one enjoyed by the general urban population. Along these lines, the National Assembly passed Act 2458 of 14 February 1997 on the establishment of a basic insurance scheme for farmers that claims to respond to their newly emerging needs.
The new system goes into effect on 1 January 1998, the date ushering in an abolishment of the supplementary insurance branch. The personal scope of the new law covers the same people who had been subject to the OGA system. The new scheme will be financed from the contributions of the insured (7%) and the state’s payment share (14%).
Seven classes of insured have been defined and provide the basis for calculating the contributions paid by the insured, on the one hand, and the state’s share on the other.
The conditions for being granted retirement-old age benefits are cumulative: the legal retirement age of 65 and a minimum of five years of insurance, which are progressively increased to 15 years after 2004. Going into retirement for reasons of invalidity requires cumulatively: an invalidity rate of 67% and a minimum of five years of insurance and payment of contributions immediately preceding invalidity.
The transitional provisions stipulate that all OGA pensioners and all who go into retirement before the end of 2002, under application of the new law, will continue to draw at the same time the entire OGA pension.
All those who go into retirement after 2003 and to whom the new law applies will draw, together with the pension underlying the new scheme, a basic OGA pension that is gradually reduced (4% subtracted each year after 2003 in such that the OGA pension will be abolished for good in 2027). For the first time the principle of successive insurance has been established. This principle enables the years of insurance from farmer schemes to be taken into account when changing profession and insurance scheme. As a final step, provisions have been made for contributions in the sickness insurance sector (1.5% for the insured, 4% for the retirees) and payment control mechanisms for contributions.
In conclusion, we would like to remark that the legislator envisages a transition, without causing any great stir, from an allowance-based scheme also providing for supplementary pensions to a new scheme based purely on contributions.
In compliance with Article 16 of Act 2434/96 concerning the procedure and conditions required for legalising the stay and work of foreigners in Greece, the authorities in charge have proceeded to implement two presidential decrees defining the appropriate action to take in this area.
The first presidential decree provides for the issue of a temporary residency permit for unregistered workers and the second decree subsequently awards a residency permit of limited duration to these same individuals (note that EU citizens are excluded from the personal scope of these two decrees). The planned procedure shall be implemented in two stages.
First stage: From 1 January 1998 until 31 May 1998 (with the possibility of prolonging this deadline by 2 months), all foreigners who fall under the personal scope stipulated by these decrees are obligated to report to the Office for Employment and Manpower (OAED) to submit a request for obtaining a temporary residency permit. The foreigners are obligated to enclose a number of supporting documents with their application.
In a second move, the OAED authorities in charge, following the conform opinion delivered by a special committee, will issue the foreigners a temporary residency permit which is valid until 31 December 1998. The family members of the permit holder may not be expelled from the country.
All those who are not in possession of this permit will be deported immediately. Certain other categories of foreigners will not be able to obtain this permit, namely those individuals who have already been convicted to a prison sentence and any individuals who can pose at any time a threat to the law and order of the country or to national security.
As far as employers are concerned who are already employing foreign workers on 1 January 1998 or are thinking of employing foreign workers until 31 May 1998, they are obligated to report these workers to the OAED within 15 days following their hiring. Once having obtained the temporary residency permit, the foreigners will retain the same rights as Greek workers (work, insurance).
Second stage: According to the second decree, the foreigners possessing a temporary residency permit may request, until 30 July 1998, to be issued a second, so-called "limited residency permit" whose duration may vary from 1 to 3 years (it may be renewed each time for a period of two years). The candidate must submit a number of particulars, with the most important being proof of a minimum number of work days (40) until 30 July 1998. Data to be taken into account for specifying how long the second permit shall be valid are the type of work carried out by the foreigner, the situation on the employment market at the given moment, as well as the general interest of the national economy. All those who show they have lived in Greece for five years may obtain a five-year residency permit. The family groupings of the holders of the second permit are also assured.
It should also be pointed out that a major social debate has been set in motion recently by the government and concerns crucial topics, such as development, employment and competitiveness and does not refrain from tackling the large issue of social security. These three large topics are inextricably linked:
Competitiveness creates new jobs and employment is associated at the same time with a distribution of social wealth and with economic development.
The social debate takes effect in two phases:
The first phrase is devoted to developing the appropriate measures for supporting the system in force, while the following phase envisages a radical reform of the system. As far as the first dialogue phase is concerned, the government proposes seven areas of discussion which seek the immediate taking of steps so that precise arguments can be formulated by the various social partners by the end of 1997. The seven areas in which action is to be taken concern:
Government action will consist, until the beginning of 1998, of taking definite decisions in the form of legislative acts so as to reinforce the current social security system.
At the same time, discussions will start up within a dialogue framework to be definitively established in autumn 1998, approaching the issue of radically reforming the social security system. The social debate on this second major issue will be based on an evaluation of the situation surrounding the current system and on a series of additional subjects:
It must thus be noted that the ultimate aim of the government is, on the one hand, to streamline and make the Greek social security system viable and, on the other, to eliminate any negative repercussions generated by the globalisation of the economy, while safeguarding a high level of insurance and social justice for the workers.
"Economic progress and social progress must develop along parallel lines."