25/05/2016
The Greek Government is legislating to adopt a mechanism for automatically cutting government expenditure relating to pensions, wages and social security benefits but also imposing taxes. If a negative differential is detected between the primary balance target and the result of the previous financial year, a Presidential Decree shall be issued by 31 May, which will automatically operate a fiscal adjustment from 1 June of that year, reducing all categories of spending in the current budget by the same percentage, with retroactive effect from the beginning of the year. This ‘cuts’ mechanism will also affect social spending and the income of wage earners, pensioners and businesses: this means that citizens will not know at the beginning of each year what their monthly income will be or what social benefits they will receive, given the possible activation of the cuts mechanism each May.
In view of the above, will the Commission say:
1. Is the possibility that Greek citizens may be suddenly confronted each May with retroactive cuts in wages, pensions and social benefits or increases in taxes and contributions compatible with the acquis communautaire and the ECHR?
2. Does this constitute an infringement of the provisions regarding a minimum decent livelihood for citizens laid down in the ECHR, since the cuts will be horizontal, without the needs of each category of citizen being taken into account on each occasion?
Answer given by Mr Moscovici on behalf of the Commission
1. The Greek law (Article 233 of law 4389/2016) on the automatic fiscal adjustment mechanism stipulates that the additional budget measures will come in force as of 1 June if the fiscal target of previous year was not met. The budget adjustment won't have a retroactive impact before that date.
2. Paragraph 5 of the abovementioned Article 233 of law 4389/2016 excludes the most vulnerable groups from the automatic savings. This provision excludes explicitly cuts on healthcare spending and social transfers to the most vulnerable groups such as family allowances, unemployment benefits, aid to the disadvantaged and low income families, and the guaranteed minimun income. Horizontal cuts will be applied only to budget catogories not excluded by virtue of paragraph 5 and the cuts can be replaced with equivalent structural fiscal measures including revenue measures, in the context of the budget process every autumn.
When Member States take measures to achieve objectives set by the economic adjustment programmes it is up to them to ensure the respect of fundamental rights in accordance with their national legislation and international human rights obligations, including under the European Convention on Human Rights, referred to by the Honourable Member.
