Cyprus's powerful SEK trade union has issued a fierce critique of recent pre- and post-election populist rhetoric, taking aim at uncosted political promises to balloon minimum pensions. The union warned that superficial "ear-stroking" campaigns are undermining serious social dialogue and threatening the stability of the entire pension reform ecosystem.

SEK has strongly condemned phenomena of political populism that manifested both before and after the elections, pointing to "unsubstantiated and fragmented references" regarding the level of the minimum pension and the broader framework of the pension system reform.

The concerns voiced by the trade union organization target not only the unsubstantiated claims made by politicians, which simply aim at ear-stroking the public, but also the government's persistence in moving forward with the reform by focusing solely on the first pension pillar, which concerns the Social Insurance Fund (SIF).

SEK, in a main editorial in Ergati Phoni (Workers' Voice), expresses grave concerns that can easily be interpreted as a direct reference to the "unfortunate" joint video released by Annita Demetriou and Fidias Panayiotou. In the video, the two political figures jointly proposed increasing low pensions to match the National Minimum Wage (NMW) threshold.

"This concern," according to SEK, "as well as the inevitable resulting degradation of social dialogue, is confirmed following the latest political statements, which push the boundaries of populism through fragmented and uncorroborated references to the level of the minimum pension."

In the controversial video, the President of the Parliament and F. Panayiotou spoke of extending the minimum pension to €1,085, matching the current limit of the NMW. The following day, Minister of Labour Marinos Moushiouttas commented that it is impossible to introduce a 125% increase to the minimum pension.

Ms. Demetriou, responding to a question from Brief immediately after her meeting with the President of the Republic last Monday regarding whether DISY had costed the three joint declarations made with 'Amesi Dimokratia', made reference to an "actuarial study" conducted by her party, which has not been made public to date.

SEK notes in its article that to ensure adequate pensions, the overhaul of the pension system must be holistic and encompass all pillars that affect and influence retirement security.

It adds that the Movement's concerns are intensifying following the presentation of the framework and assumptions to be factored into the design of the Independent Authority for the Monitoring, Control, and Investment of a portion of the SIF reserve.

"SEK has warned from the very beginning of the pension reform debate that if a comprehensive strategy is not deployed and without maximum consensus on the bills to be tabled for a vote in Parliament, discrepancies will inevitably emerge, leading to an urgent need for redesigning and recalculating the financial parameters," the union argues.

It is noted that Andreas Matsas, General Secretary of SEK, has reiterated for the umpteenth time that the pension reform "requires holistic planning, seriousness, and consistency, while the ultimate objective remains pension adequacy."

"A reform that fails to integrate the second pillar, which concerns Provident Funds, cannot be complete and leaves the minimum pension far below the poverty line," he observes.

According to SEK, the third pillar, which concerns private insurance, must also be regulated, as well as pillar zero, which is designed to support low pensions through targeted state social intervention.

It is also vital, the union adds, to finalize the operational framework governing the independent authority, where the active participation of social partners is crucial, given that the contributing parties, aside from the state, consist of both businesses and employees.

For SEK, reaching an agreement on how to manage the 12% actuarial reduction represents an absolute priority, aiming to finally resolve a lingering impasse that continues to penalize a significant number of retirees.

"On the positive side of the ongoing debate is the decision to terminate borrowing from the Social Insurance Fund, the gradual repayment of the outstanding debt, and the formulation of a clear investment policy," the union highlights.

Source: Brief