Cyprus Mail
Cyprus

Stay of execution for social insurance backsliders

Labour Minister Zeta Emilianidou

By Elias Hazou

A government bill providing for the payment in instalments of dues to the social security fund (SIF) is to be tabled to parliament by year’s end, labour minister Zeta Emilianidou told MPs on Monday.

The fund has been running a deficit for years. Earlier this year, it was disclosed in parliament that dues to the SIF stood at €100m.

Under the new bill, individuals would enter into an agreement with the fund, allowing them to pay their accumulated debt in instalments over a period of time.

Under such a plan the state would refrain from legal action, but on the proviso that the person is paying in full his or her current dues.

Persons complying with these terms would see court warrants for unpaid dues suspended, but should they fail to settle their current dues the warrants would be re-activated.

However, said Emilianidou, the labour ministry lacks the resources and manpower to monitor this programme.

The ministry is therefore considering farming out the monitoring programme to the private sector.

According to Emilianidou, an actuarial analysis of the SIF – carried out at the request of Cyprus’ international lenders – found that the fund is viable until the year 2060 without the need to raise contributions.

Responding to a question, she denied that the SIF’s debt has been written off.

The troika proposed gradually – by 2060 – doing away with a 4.3 per cent contribution paid by the state for all workers and writing off some €7bn owed to the social insurance fund by the state.

Speaking on Monday during a parliamentary review of the labour ministry’s budget for 2016, Emilianidou also revealed plans to crack down on undeclared work.

A government-commissioned report, carried out by a Belgian organisation, found that undeclared work currently amounts to 24 per cent.

The rate was calculated based on random inspections.

The minister said new legislation and measures would come into effect in early 2016, such as intensifying inspections and increasing fines on persons not declaring their work.

The ministry’s budget for 2016 comes to €954.2m, of which €892.2m relates to spending on welfare benefits, which include the Guaranteed Minimum Income (GMI) scheme, low-level pensions and child benefits.

Amid the financial squeeze, the government has not cut spending on welfare, Emilianidou said.

Because of GMI, she added, today some 13,000 families are supported who prior to the scheme’s introduction were not received any state support.

GMI costs around €4.5m a month.

The minister said that a benefits database has been created, which includes 255,000 persons who are recipients of child benefit, low-level pensions, single-parent benefit, and other state assistance.

Citing official statistics, Emilianidou said the jobless rate currently stands at 14.7 per cent, dropping from 15.4 per cent in September of last year.

“Nevertheless we continue to view unemployment as a major problem,” she told MPs.

Next month the government will roll out a programme for the placement of 2,500 unemployed college graduates in the public and private sectors, on six-month internships.

The last such scheme saw the hiring of 750 persons classified as long-term unemployed, with the state subsidising 60 per cent of their salary.

Emilianidou said that in principle she is in favour of pensions to men, “as it is a matter of equality,” but said such a measure should not further burden the SIF.

In his own remarks to reporters, House finance committee chairman Nicholas Papadopoulos deplored the fact that one in three Cypriots are living under the poverty line, while Cyprus’ per capita GDP is today lower than Greece’s.

“In the face of all this, the DISY government keeps parroting daily that Cyprus is a phenomenon and a success story,” he said.

 

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