Alexis Tsipras penned in the pages of Der Tagesspiegel railing against anyone who says German taxpayers are paying for Greek wages and pensions plus some Schopenhauer thrown in.
On the pension and wages issues Tsipras claims: “It may sound somewhat suspect that 75% of the primary expenditure is used to pay for salaries and pensions. If it sounds unbelievable—that’s because it is: only 30% of the primary expenditure concerns pensions. Moreover, it’s important to note that wages and pensions are not the same thing, and assessing them together is a serious methodological error.
The comparison with Germany’s pensions is also rather misleading. According to the Ageing Reports (2009, 2015), pension expenditure in Greece rose from 11.7% of GDP in 2007 (slightly higher than the 10.4% in Germany) and reached 16.2% in 2013 (while in Germany the numbers remained almost stable).
What caused this increase? Was it due to an increase in pensioners or an increase in pension amounts? The answer is: Neither. The number of pensioners has essentially remained unchanged and pensions have shrunk dramatically due to the implemented policies.
Simple arithmetic is sufficient to reach the conclusion that the increase in pension expenditure as a percentage of GDP is entirely due to a decline in GDP (denominator), and not to an increase in expenditure (the numerator). In other words, GDP declined faster than the pensions”.
The retirement age was already raised to 67 in 2012, i.e. two years more than in Germany. Numerous exemptions, however, have allowed most workers to retire earlier.
"The most significant disruption to the pension funds is due to dramatically lower revenues in recent years. These were caused by the loss of assets due to the PSI (haircut of Greek bonds held by the Pension Funds, totally approximately 25 billion euro) as well as – and most importantly – by the sharp drop in contributions that resulted from soaring unemployment, and the reduction in wages." the Greek PM said.
Pensions have become one of the biggest sticking points in the negotiations between Tsipras' left-wing government and Greece’s creditors. The elimination of early retirement benefits is one of the creditor's central demands. The “limiting” of exemptions means nothing less than the blanket enforcement of the higher retirement age. Such a lengthening of the work life of Greek citizens amounts to a massive pension cut.
With a jobless rate of about 25% and out-of-work benefits of €360 a month - generally paid for no longer than a year - pensions have become according to Tsipras "the last refuge of entire families who depend on a single pension to survive".