Greek Insurance System Ready to Collapse

unemployment_GreeceIt appears that despite numerous measures imposed by the Greek government, the insurance system in Greece is on the edge of collapse due to the increasing unemployment, uninsured employment, reduced budget funding and an influx of retirement.

Although, the Labor Ministry expects that the revenues of IKA, largest social security organization in Greece, will increase, the General Confederation of Greek Workers (GSEE)  estimates that IKA will suffer losses amounting to 8 billion euros in 2014 due to unemployment, which is expected to reach 31.5%.

The Labor Institute revealed that high unemployment and wage cuts have resulted in losses of 10.5 billion euros from insurance funds. while uninsured and undeclared employment have deprived the Greek funds of a further 8.5 billion euros. The situation at IKA is desperate. One in three employees is uninsured, which leads to losses of 6 billion euros in contributions. Moreover, the fund has accumulated 7.5 billion euros worth of debts. Meanwhile, expenses have reached 11.08 billion euros between 2011 and 2012 due to an increase of retirements.

Together with the increasing rate of unemployment in Greece, uninsured and undeclared employment are also having a significant impact on the insurance funds. Recent audits in 1,880 Greek enterprises revealed that of the 5,839 employees, only 1,446 (24.76%) of them were uninsured. The fines for contribution evasion reach 1 million euros, not including fines for labor legislation violations.