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Pensions in Greece - and the people who love them

Reading the Athens News this morning, I stumbled upon an article concerning the fact the OECD is pitching for extensive reforms in the Greek pension system [ I'd quote the text, but the Athens News only updates their site on Thursdays following distribution so that they can make money off the print edition...why they haven't switched to online pay service is beyond me.]
. While they did a fairly decent job at repeating the report pretty much to suit, AT failed to educate – in my humble opinion – the average reader about what exactly all that pension reform stuff means for greeks and why they are faring so badly to begin with.

This is interesting to see actually, since when I first arrived in my beloved host land I looked into the social expenditures by agency (function). One may find that hard to believe, but I get a special feeling inside by knowing something about a country’s little nuances.
For instance, Greeks lead the world in smokers and percent of college educated students (however I must say that college educated loses its meaning once you get so many people educated…if everyone has a university degree, then what separates people apart on the labor market? Hmmmm…. Connections? More than likely. But that is a totally different story). The point here is this: Greece’s pension system is bizarre, but it makes sense if you think about it.

First definition: replacement rate- measures pension entitlements as a share of individual lifetime average earnings. What does that mean ? It means you pay so much money out of your wages throughout your life, which is used generally to pay for current pensioners benefits, in exchange for entitlement to future income when you aren’t working. Simple concept, that’s why it’s so popular across the world.

This replacement rate is about 60-70% for most European n
ations, which have the most advanced social protection systems in the world. Greece, has a few kinks though that just doesn’t match up with the Euro-norm. Mainly, grandpa and grandma get 110% of average wages… what? Yes. 110%. At first sight I nearly choked on my starbucks, as I hadn’t fully gotten addicted to my frappes yet. How can that be? And then I looked at the unemployment benefits for Greece…only italy fares worse, and I’m not sure that’s the sorta thing Greeks need to be proud about. So why on earth isn’t anyone screaming upset? The answer is simple actually, grandpa and grandma share, and they share a lot.

The thing about greek parents is that they maintain a pretty strong hold on the family, even when they have grandkids, but usually parent to child distribution. So unemployed son/grandson is getting money to live from mommy/daddy/or gran and gramps

Second Definition: Intergenerational distribution-when you get stuff from your grandparents or parents and it keeps you comfortable (we shant include the wonderful credit card debts I get to inherit from my parents – thanks pop). It all boils down to family structure and traditional functions.

It’s so hard to live in Greece as a foreigner, as compared to a native, because the system (familial structure) is actually a barrier to entry – not to mention the language and the 7 euro beers. At any rate, this is dissertation topic stuff, and I’m not the first to point it out. But for the Athens News, and their readers, here’s a few bits of information to help you get a clearer picture of what you are paying for and what you are headed into.

Now keep in mind that people are getting older these days, Europe especially, and the birth rate has plummeted. Which boils down to less people to pay for more retirees. Not a pretty picture ifyou get the picture. What I fear will happen is that no one will touch the pension system in the near future out of fear of political death and in a couple generations Greeks will wake up and fine all the jobs paying all their pensions are in the hands of all the migrants they think they didn't need, who could most likely be willing to see real reform come in a landslide.

Third definition: Old Age Dependency-this is the ratio of pension age people to working (tax paying) people...

I'm just saying.

There's a quote I heard once, "You don't drive too wreckless in the mountains, or you don't drive long on the mountains"...I think some responsible driving is in the future for the country...and soon. Looking at the long-term projections, Greece is in for a very rude awakening in 30-40 years if business continues as normal.

{{all graphs from OECD statistical database}}