General Strike in Greece: A Brake to the “Socialist” Government’s Neoliberal Social Insurance Proposals

For most of the period since the fall of the dictatorship (1974) in Greece, trade unions have been holding two separate May Day celebrations:  one organized by the General Confederation of Greek Labor (GCGL) and the Central Council of Public Employee Unions (ADEDY), which attracts trade unionists who lean to the governing Panhellenic Socialist Movement (PASOK), the New Left Alliance (NLA), and the conservative New Democracy (ND) party, and another organized by trade unionists affiliated with the Greek Communist Party (KKE). While the workers who lean to the KKE also belong to the above two federations (GCGL and ADEDY), they organize their own May Day celebrations.  However, during the Spring of 2001, trade unionists of all political and ideological persuasions (PASOK, ND, KKE, and NLA) joined ranks in organizing two general strikes.  The first of these, on April 26, 2001, was jointly organized by the GCGL (which represents private-sector workers) and ADEDY (which represents public employees).  The second general strike, likewise organized by the GCGL and ADEDY, took place on May 17, 2001, and was also joined by the General Confederation of Crafts and Business Entreprises (GSEVE).  Despite varying estimates of the number of workers who participated in the two strikes, there is a general consensus that all sectors of the economy came to a standstill.  A universal news media blackout during both days — with only music broadcasts — added a dramatic element to the events.

The immediate cause for this unprecedented mobilization was the socialist government’s proposals for “reform” of the social security system, which has a current deficit of 1.4 trillion drachmas [US$3.5 billion]. There is a general agreement among all political parties and trade unionists that the system will face bankruptcy unless measures are taken;  differences exist only as to the date of the bankruptcy, with the government being more optimistic and predicting a timetable of 10-15 years and the trade unions a timetable of 5-6 years.  

Various reasons are put forward for the anticipated social catastrophe, some based more on structural models and others more in line with neoliberal assumptions.  Factors cited include: demographics (low birth rate, aging of the population), the high level of unemployment (estimated at about 500,000 workers), the underground economy (about 500,000 non-documented workers),1 the government’s non-payment of its share of contributions (in the trilateral system), the misplacement and mismanagement of insurance funds, the plethora of insurance funds, and the absence of quality control over the distribution of benefits (e.g., excessive proportion of disability benefits, continuation of benefits despite death of the beneficiaries).  These and other factors have affected the ratio of retirees to workers (since 1981 it is 1:2) and the inflow of funds, and are generally responsible for the anticipated bankruptcy.

While there may be a difference of opinion, depending upon one’s ideological preference, as to which of the above factors should have causal priority, there was general consensus that the socialist government’s initial proposals were more in accordance with neoliberal tradition. Specifically, they revolved around the demographic factors and recommended raising the age of retirement.  Second, they adopted a method of calculating benefits (the best ten years of one’s work-life) which would inevitably lead to a reduction of benefits for all categories of workers — both private- and public-sector — when compared to the status quo.2  This also threatened the guaranteed social security monthly income of 150,000 drachmas [US$375] which had been part of PASOK’S 2000 election platform and which has already been implemented.  Thirdly, there was no acknowledgement of the government’s responsibility in the problem nor any reference to the imposition of taxes on higher incomes, on the pretext that this would affect investments, development, and the employment prospects of the economy, despite the fact that some cadres of the Socialist Party had made such proposals.  Finally, although it was not explicitly stated in the initial proposals, the impression was created that in order to supplement their reduced retirement benefits the workers and public employees would have to resort to private insurance schemes.

A significant factor in the general mobilization of the trade unions was the documentation approach used by the Simitis government for the social security reform proposals.  First, the government sought consultation from   a Greek Economist (Prof. John Spraus) living in Britain and subsequently from a British actuarial company affiliated with the British Ministry of Social Affairs.  There was no joint consultation with capital and trade unions from the start, as there had been in other EU countries going through similar reform processes,3 despite last year’s collective contract between the Greek Industrialists’ League and the GCGL that contained provisions for such consultation.  Furthermore, the trade unions were not apprised of the methods and conclusions of these experts and specialists until after the proposals had been published.  This no doubt exacerbated the mistrust and polarization between government and labor unions and led the trade unions to commission their own experts.  Thus, the GCGL/ADEDY commissioned the Greek Institute of Labor of GCGL/ADEDY and a Greek university professor (Savvas Robolis) for the diagnosis, projections, and proposals.  Their proposals focused more on redistributive solutions, increased income  (e.g. increased employment, control of the underground economy, guarantee of government contributions and the trilateral system), and correction of the fund-administration deficit by instituting more transparent and collective mechanisms, in which representatives of the trade unions will also participate.  In short, the British actuarial consultants focused on “grant control” while the Institute of Labor consultants emphasized “income control” strategies.4

The  neoliberal proposals and strategies of the Greek government — which no doubt converge with the avalanche of changes  (e.g., privatization of public utility enterprises) following the “demise” of  socialism — constituted a deviation from the PASOK ideology and its image as a party of the less privileged classes.5  Furthermore, the proposals came after a decade of sacrifices and relative peace between capital and labor for the sake of access to the EU Single Currency Union (Greece became a member in 2000) and following promises on the part of PASOK that once access to the Single Currency Union had been achieved the government would show its “social face.”  These promises generated expectations for more progressive social policies not only on the part of the PASOK cadre and followers but also among the Greek electorate in general.  Moreover, these conditions set into motion relative deprivation processes and led to mobilization at all levels of the PASOK structure (followers, members, Executive Committee, Central Committee the Party’s convention) as well as the level of the general electorate.6 No doubt, a reversal in the Gallup polls in favor of the New Democracy party (ND leading by 7% to 9%) and a decline in the perception of Prime Minister Simitis as a better manager of public affairs also played a role in the mobilization of PASOK cadres and members.

Following the first general strike, and undoubtedly encouraged by the internal party opposition and the support of the other parties, the trade union leaders refused to participate in the dialogue with the government and demanded that the dialogue start from a zero basis.  In response, the government announced that it was “freezing” its proposals and called anew for a dialogue with the trade unions.  Amidst a climate of mistrust and polarization, the union leaders called not for “freezing” but for “dumping” and “scrapping” the initial proposals and starting the dialogue from a genuine zero basis.  In turn, the trade unionists upped their demands and put forward new conditions for a dialogue; they demanded that the government commit itself to the public and trilateral character of the insurance system without increases in the age requirements.  The government made concessions with regard to the public character of the system and a guaranteed minimum social security income, but it did not commit itself to the trilateral system.  Despite continuing objections on the part of communist trade unionists and the reservations of conservative and new left unionists, the leadership of the two trade union federations joined the preliminary dialogue with the government.  During this initial dialogue, which was more procedural than substantive, the government proposed setting up a joint body of experts to assess the dimensions of the problem; but the leaders of the union federations refused to participate, probably afraid of charges of co-optation from the opposition trade unionists. In addition, both parties agreed to continue the dialogue in the fall.

Although the trade union leaders expect an open timetable for the negotiations, the government will be under pressure from the EU Economic Ministers to close the issue by the end of the year.  The review of the Greek Stabilization Program which is scheduled for November 2001 must include the components of the reformed social insurance system taking into consideration among other things the demographic situation.7

A note on the role of the official opposition party 

During the last twenty years, the conservative “New Democracy” party was in power for a brief period of three years (1990-1993).  In 1993, the conservatives introduced a number of changes in the social insurance system (e.g., securing the government’s contribution in a trilateral system, raising women’s retirement age to 65, and basing the retirement benefits of private- sector workers on the last five years of work).  While the conservatives supported the existent legislation during the recent controversy, they did not have a unified well-articulated position.  The President of the party (K. Karamanlis, the nephew of the former Prime Minister and President), who since his access to the office has been trying to move the party toward the center, took a public stand in accord with the trade unions. Specifically, he expressed support for a dialogue from scratch as well as for the maintenance of the trilateral system of contributions, the level of contributions, and the present age limits.  Other cadre of the ND party took public stands against the capitalization of the insurance system (as not feasible for Greece) and in support of the integration of non-documented workers, the collection of all contributions, the better management of health and social security funds, and structural reforms of the economy aimed at increasing competitiveness and employment. Generally, these proposals appeared more “radical” and “structural” in nature than those enunciated by the socialist government.

However, the pronouncements of the ND party President and the conservative party cadres, which were circulated in the conventional print and electronic media, came into contradiction with the proposals published on the party’s webpage.   Among other things, the webpage text called for increases in the age of retirement, for a gradual capitalization of the insurance system, for modeling the system after the three-pillar system of the World Bank, and for a more regressive method of calculating benefits (i.e., total years of coverage) as compared to the method proposed by the government.  The ND leadership characterized the webpage positions as the “personal opinion” of an Economics professor and instituted more collective mechanisms to control the new information technology, although the positions expressed in the webpage constitute common policies of the European Conservative and Christian Democrat Parties — a coalition which also embraces the Greek ND party.8 Undoubtedly, the gap between the conventional and webpage statements points to the existence of populist tendencies within the official opposition party, which has been out of power for almost two decades. Nonetheless, the government in its attempt to regain lost ground, following the massive reactions to its neoliberal proposals, exploited this discrepancy between conventional and internet media, accused the conservatives of “double-talk,” and, in parliamentary debate, invoked old ideological differences between the two major parties and the incapacity of ND to change.9

A final note on political party/trade union relations and the recent general strikes

Traditionally, Greek trade unionists are overly dependent upon the respective political parties.  However, during the recent social security controversy, they demonstrated an unprecedented degree of autonomy — especially the PASOK trade-unionists, who came into conflict with their own government.  (The question of autonomy between the minor opposition party leaders and their respective trade unionists is difficult to assess since these opposition parties were against the government proposals and their party leaders also participated in the general strikes.)  In any case,  the mass and active participation of  the PASOK  trade-union leaders in the general strikes, besides contributing to a  reversal of neoliberalist policies of their party, may also have longer-range positive repercussions.  Beyond being a crucial factor in forcing the party to demonstrate its “social face,”  the mass reaction  may lead to a  revitalization of the party’s ideological base, in this age of rampant neoliberalism. 

Athens, May-June 2001

Notes

1. This factor will be corrected, since about 250,000 non-documented workers were legalized during the first regularization process and about 500,000 will be legalized during an ongoing regularization process.

2. For the private sector, the benefits are based on a percentage (80%) of the last five years’ wages. In the public sector (civil service and public utilities), the benefits are 80% of the last month’s salary.  There are also cases in the public sector where, together with the supplementary insurance, the retirees earn more social security income than they had as active workers.  Nonetheless, the initial proposals did not explicitly make such distinctions which in terms of public relations may have been a mistake.

3. Aris Sissouras, “Organizing a dialogue for the insurance system,”  TA NEA,  22 May 2001.

4. Savvas Robolis, “There exist workable, sustainable solutions for the insurance system,” Oikonomikos Tachydromos,  2 June 2001, pp. 38-42.

5. Menelaos Givalos, “Social counter-revolution,”  TA NEA, 17 May  2001.

6. It should be mentioned that in both trade union federations, PASOK members have the plurality of seats and also occupy the President’s position.

7. Eirini Chisolora, “The EU Puts November as a Timetable for the Reforms in the Social Insurance System,”  TA NEA,  5-6 May 2001.

8. P. Galatsiatos, “ND:  Social Security Income should be reduced by 30%,”  TA NEA,  11 May 2001.

9. It may also be instructive to mention the position of the Greek Industrialists League, which expresses the interests of Greek capital and usually supports the conservative party.  They supported the system of trilateral contributions, a flexible retirement age with incentives for remaining longer at work, an 80% replacement income (principal and supplementary insurance) with special considerations for heavy and unhealthy occupations, and joint management of supplementary insurance funds.  Finally, they also expressed their opposition to an increase of taxes as a method of supporting the system (D. Skoufou, “Retirement even up to age 67, propose the industrialists,” TA NEA, 10 May 2001).

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