Golden Mediterranean pensions fade as austerity bites

Tue Dec 13, 2011 10:10am EST

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* Germans resent tales of golden Greek pensions

* Italy dismantles generous pension deals - gradually

* Greek hairdressing no longer "arduous and hazardous" job

* Fewer than 10 pct of Greeks can now retire before 65

By Renee Maltezou and Gavin Jones

ATHENS/ROME, Dec 13 (Reuters) - Southern Europe's once-legendary pensions which allowed some lucky workers to retire young in subsidised comfort are dying out fast, but still far fewer Greeks and Italians work into their sixties than their neighbours to the north.

An age of austerity means that the state-funded right for some to enjoy the good life in their fifties, with plenty of "hardship" allowances, will soon be consigned to the past.

Germans, who work more into their sixties than most other Europeans, particularly resent stories of golden Greek state-funded pensions while they are funding bailouts for the near-bankrupt nation.

But while Italy has yet to dismantle many of its generous pension arrangements, little remains of a Greek system which once classified hairdressing as an "arduous and hazardous" occupation that merited special payments.

Before reforms introduced last month, Greek barbers and hairstylists who had turned 60 took home an average pension of about 800 euros after working just 15 years.

Some could even retire on a reduced pension at just 40 before last year, when another sweeping pension reform prescribed by the country's international lenders took place.

Those days are over. Greece's international lenders, the European Union and IMF, are applying heavy pressure on the government to tackle a huge budget deficit.

Last month, Greece struck hairdressers off the list of jobs deemed "arduous and hazardous" under a reform aimed at curbing early retirement and supporting a tottering pension system.

HAIRDRESSERS UNIMPRESSED

Hairdressers are unimpressed. Katerina Ilia, a 44-year-old mother of two who spends most of the day in her tiny central Athens salon with pink walls, protested.

"It's not fair ... I've been working for almost 30 years and doctors always advise me to quit," said Ilia, who says she suffers from respiratory and skin allergies after years of handling chemicals found in hair dye products.

"I wear gloves but it doesn't do much and when I use hairspray I often feel I can't breathe afterwards," she said as she dyed the hair of a 70-year-old woman. "People think it's easy but they don't realise that we are on our feet all day."

Now, Greek barbers cannot retire before turning 65 - the statutory retirement age after the sweeping pension reform - unless they have worked for at least 40 years.

In fact, fewer than 10 percent of Greece's nearly 5 million workers will now be able to retire before 65. Last year's reform in a country where all pensions are state-funded put men and women, who could retire as early as 40, on equal footing.

This will mean big changes in the way Greeks live, at least the ones who still have jobs as unemployment soars while the nation suffers under its fourth year of recession.

At the moment just 40.7 percent of Greeks aged between 55 and 64 are in work. That compares with 59.9 percent of people in Germany, which is the biggest contributor to EU bailouts for Greece, Ireland and Portugal, according to EU statistics.

While such figures are affected by big differences in unemployment rates, they still aggravate many ordinary Germans, whose views are often expressed by the mass-circulation Bild newspaper in outraged headlines.

STILL THEY INSULT US

Feelings ran high earlier this year when protesters in Athens used Nazi banners to criticise German Chancellor Angela Merkel's insistence on strict terms for the Greek bailout. "We pay - and still get insulted!" said Bild.

Nordic countries have the highest proportion of elderly workers. In Iceland, which suffered its own financial crisis in 2008, no fewer than 77.5 percent of 55-64 year-olds still work.

That compares with an EU average of 47.5 percent, not to mention Italians who are near the bottom of the European league on just 37.4 percent.

Austerity has come later to Italians than the Greeks but many of them are still having to say farewell to the dolce vita, at least at an early age.

Italy has a low employment rate across the age groups, partly due to high youth unemployment and a relatively low proportion of women in work.

However, since the mid-1990s, Italy has been progressively tightening up what was the most generous pension system in Europe in terms of early retirement age and payouts.

Italy's public spending on pensions, at over 16 percent of gross domestic product, still compares with an EU average of 11 percent and is the highest in the bloc. This reflects an elderly population and previously unsustainable rules which allowed millions of workers to retire in their fifties with a pension based on their end of career salary.

For most Italians those heady days are over. Under the latest reform, pensions will be calculated strictly according to contributions paid into the system and the retirement age will be set at 66, or after payment of 43 years of contributions.

However, many workers still benefit at least partly from the previous generous terms that are being phased out, and special conditions for some workers remain untouched as yet.

For instance, the average pension of Italian airline employees in 2010 was 45,000 euros a year, far above the national average of 10,600. Special terms for pilots and cabin crew allow some employees to retire as young as 53.

"Of course the pilots get much more than us, and we'll all get less when the pensions are completely contribution-based," said Alberto Mazzali, a 47-year-old Alitalia steward. Mazzali joined Alitalia at 27 and expects to retire at 57 on a pension of around 1,300 euros per month.

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