Υπ. Labor: Social spending increased by 2.6% in 2022

The transition from pandemic support measures to policies to create new jobs and strengthen social policy is marked by the budget of the Ministry of Labor and Social Affairs for 2022.

In order to support the jobs and incomes of the employees, the expenses of the Ministry of Labor increased by about 25% in the two years 2020-2021. The total cost of the Covid measures for this period exceeds 9 billion euros. For 2022 the need for emergency measures is expected to be less, as the economy has returned to normal.

In this context, the projected expenditures of the budget of the Ministry of Labor for 2022 amount to 21.612 billion euros, while if we subtract the cost of covid measures amount to 20.763 billion. This amount is increased by 526 million euros (2.63%) compared to 2021.

It is worth emphasizing that, regardless of the special circumstances created by the pandemic, the budget of the Ministry of Labor is steadily increasing during the period of governance of the country by the SW. Particularly:

The regular budget of 2022 (excluding Covid expenditures) is increased by 1.510 billion (+ 8.1%) compared to the Budget that the SYRIZA government had voted for 2019.

The public investment program is also increased by 380 million (+ 112%) compared to 2019. This increase is due by about 2/3 to the inflow of funds from the Recovery Fund (+250 million) and by 1 / 3 (+130 million) in the commitment of more funds from the NSRF for employment support programs.

As a result, the total budget (Regular and PDE), shows an increase of 1.890 billion (+ 10%).

Positive effect on insurance funds from the reduction of unemployment

Unemployment has fallen by 4.2 percentage points (from 17.2% in July 2019 to 13% in September 2021), since ND took over the government of the country. Thus it is at its lowest point since August 2010.

At the same time, the number of employees has increased in recent months, exceeding for the first time since August 2011 the psychological threshold of 4 million. According to Eurostat data, between July 2019 – September 2021 Greece had the largest decrease in the unemployment rate between EU countries. During the same period, unemployment increased in most Member States.

These developments have a positive effect on the insurance system. Because the income of the insurance funds from the insurance contributions will increase. And this will happen despite the further reduction of the amount of contributions for employers and employees (due to the reduction of the contributions of the supplementary insurance by half a percentage point in 2022). It is expected that the increase in EFKA revenues will exceed both the expected increase in pension expenditure (due to the gradual liquidation of pending retirement files) and the increase in the number of retirement applications.

The reform of the auxiliary insurance and its gradual transformation into a capitalization (from distributive) character was passed by law 4826/2021 and is a significant change in the insurance system that will operate at the beginning of 2022. Primarily seeking to reduce the insurance exposure to Demographic risk and securing higher pensions, supplementary insurance reform is simultaneously turning part of the insurance system into a growth tool. The reform aims to restore the confidence of the insured in the social security system, as the logic of the system is differentiated, since each insured will receive a pension from their own contributions and not from those of younger employees.

In addition, with the creation of TEKA and the change of example in terms of governance and professional management, the need to reform the regulatory framework governing the establishment, organization and supervision of Occupational Insurance Funds comes to the fore in a more urgent way. The reform effort will henceforth focus on identifying the weaknesses and development prospects of the second pillar of occupational insurance. In this context, a legislative initiative is expected to build on the European institutional tools and good practices applied in other countries, with the aim – among other things – of effectively supervising the first and second pillar insurers that implement the capitalization system of economic operation.

At 10.5 billion the support package of the Ministry of Labor for the pandemic

In 2022, labor market support measures from the pandemic are expected to exceed 1.1 billion euros. Therefore the total package is expected to exceed 10.5 billion as in 2020 4.1 billion were allocated and in 2021 5.3 billion.

This is the largest and most massive program to support workers and the unemployed that has been adopted in recent years. As a result, not only did unemployment not rise as almost everyone expected, but on the contrary, our country achieved the highest rate of unemployment reduction in the EU in 2021.

Special mention should be made of the suspension of contracts, one of the most important support measures against the pandemic, which has contributed to the rescue of hundreds of thousands of jobs while supporting the income of workers.

The total cost of this measure amounts to 5.4 billion euros (of which 3.8 billion relate to special purpose compensation and 1.6 billion to cover insurance contributions).

In the period November 2020-April 2021, an average of 550 thousand beneficiaries were included on a monthly basis with the cost exceeding 300 million euros. With the gradual opening of the economy, the use of the measure decreased significantly. In particular, only 4,366 people used it in August 2021 at a cost of 2.2 million euros, while in September the number of beneficiaries amounted to 3,372 with a total cost of 1.6 million euros. From October 2021, the measure of suspensions continues to be applied to protect jobs in the areas affected by the natural disasters of last August.

Measures to create new jobs

As the country emerges from the pandemic and normalcy returns, it needs to shift from measures aimed at maintaining jobs to measures aimed at creating new jobs.
In this context it was decided:

– The extension of the subsidy program for new jobs for 2022, from 100,000 to 150,000 jobs with the estimated cost amounting to 186 million. It is recalled that this measure subsidizes the total insurance contributions (employee and employer) for 6 months, providing incentives for businesses and employers to create new jobs, as non-wage costs are significantly reduced.

– The “first stamp” was introduced, which supports the recruitment of young people up to 29 years old, without previous service, in the amount of 1,200 euros for 6 months (600 euros to the employer and 600 euros to the employee).

The reduction of insurance contributions

The government has reduced insurance contributions by 3.9% (-2.3% to the employer and -1.6% to the employee), while in 2022 it is planned to reduce the supplementary insurance contributions by 0.5%, equal for employers and employees.

The loss of revenue caused to the budget of e-EFKA and OAED by these reductions is covered by the State Budget.

The cost of the measure for 2021 is set at 816 million euros, while for 2022 it is projected to rise to 849 million euros.

Key points of the Social Budget

The cash balance of Social Security Organizations, except EOPYY) is expected to reach 783 million euros in 2022, ie increased by 656 million compared to 2021. The improvement is mainly due to revenues which will be increased by 1, 15 billion thus offsetting the increase in expenditure by € 494 million.

The increase in revenues, as mentioned above, is mainly due to the strengthening of employment, debt settlement and the increase of state funding to the insurance funds.

On the expenditure side it is expected:

– an increase in expenditure on pensions by 316 million, mainly due to the award of pensions pending in previous years,

– increase in OPEC funding for family allowances (+15 million), disability allowances (+5 million), school meals (+18 million) and other programs (+20 million)

– a new budget of 100 million euros for the payment of housing allowance by OPEC established by the Code of Debt Settlement and Provision of Second Chance to Borrowers.

In addition to the increase in the above welfare benefits, the Ministry of Labor and Social Affairs continues to finance the parallel program of access to nurseries and kindergartens, which expands the circle of beneficiary families (this year 13 children are included in many nurseries. compared to 2019).

In addition, the Ministry strengthens the interventions for the modernization of welfare services and the support of the social integration of our most vulnerable fellow citizens, utilizing for this purpose the European Funds.

In particular, through the NSRF, it is planned to spend for social inclusion projects, during the next programming period, funds that reach the amount of 2 billion.

The Recovery Fund also promotes modern social protection tools, with a total budget of 480 million euros. These include the Disability Card, the personal assistant for the disabled, the creation of 50,000 places in daycare centers, the promotion of the deinstitutionalization of vulnerable adolescents through the creation of semi-autonomous living quarters and the creation of a comprehensive early intervention framework for children with disabilities.
It is pointed out that Greece is one of the first countries to incorporate in its law the EU Council Recommendation establishing the European Guarantee for Children. The aim of the Recommendation is to prevent and combat the poverty and social exclusion of children and to protect their rights.

Strengthen gender equality policies

The sector of gender equality for the year 2022 will be strengthened with the increase of the funds from the current NSRF but also the inflow of funds of the Recovery Fund in an effort to strengthen the policies for the support of working mothers and to facilitate its harmonization family and professional life, to implement the requirements of the Istanbul Convention on the Prevention and Suppression of Violence against Women and to highlight the importance of gender mainstreaming in all sectoral policies.

The total increase of the budget for the field of gender equality concerns an amount of € 14,151,000. More specifically, it concerns the implementation of flagship projects, such as the co-financed “Neighborhood Nanny” program, the creation of storage facilities in 120 large companies and the reform program to enhance diversity in the workplace, the integration of the gender dimension in public policies and the preparation of budgets with the activation of the Technical Support Instrument, as well as other smaller budget but equally important projects.