According to Kathimerini newspaper (link in Greek) the 260,000 businesses risk being in forfeiture, facing seizures of assets and the total available funds in their bank accounts.
According to the report, legislation passed in 2013 called ‘New Beginning’ (Nea Arhi – law 4152/2013) which provided for the restructuring of outstanding contributions to social security funds, is effectively dead in the water, inaccessible to the vast majority of companies and the self-employed who owe back payments to the country’s two largest social security funds: IKA (the Social Security Institute) and OAEE (the Insurance Organisation of the Self-employed).
Citing IKA officials, Kathimerini states that if within the next two months a new and improved measure is not passed then thousands of businesses including large companies will go into bankruptcy with an ‘incalculable’ cost for the social security funds.
The ‘New Beginning’ measure was implemented following an agreement between officials of the Labour Ministry and the troika’s technical teams. It was intended to provide a way for businesses that had outstanding social security payments due to make these in parallel with their current payments. However it has proven to be a failure with 95% of such businesses unable to benefit from the measure.
According to the Kathimerini this is because the New Beginning measure has a fixed deadline. As a result every month that passes shortens the available time for the installments to be paid on older debt. In July of 2017 a indebtee will have to pay the full amount owed in a one-off payment. As a result businesses that are unable to qualify for the measure and meet both new and old payments, fail even to keep up with current payments as they know that, even if they do, they will be subject to measures such as asset seizures over the older debt.
Of the 260,000 businesses with outstanding social security payments due, only 15,000 are making use of the New Beginning measure. The majority of these owe relatively small amounts (less than 50,000 euros) with those with the biggest debts largely unable to take advantage of the scheme.
For IKA the New Beginning measure was expected to raise 1.2 billion euros within the year but that now appears wildly optimistic if there are no further measures to provide a way out for those unable to meet their current obligations and make up older payments at the same time.
Reportedly for months now social security funds and business groups have been warning of the problem and have submitted proposals for reform of the system. Yet the government has not provided any indication yet as to whether it will seek a change the conditions for the repayment of old obligations which would require the troika’s approval.
According to Kathimerini the problem is so severe that the General Secretariat has even considered raising the retirement age by two years in order to offset a potential writing off of the old debt in order for the slate to be wiped clean and for businesses to return to keeping up with their current social security contributions.
For its part IKA has submitted a proposal which would see payments owed up to 31/12/2013 restructured with 25% to 60% discounts for one-off settlements, an elimination of the 8.15% interest rate and an increase in the the number of months for repayment to at least 72 months (in Italy it is 120 months).