The government forecasts that the Social Security system's annual deficit will equal 1.8% of the national GDP by the end of 2013, which is four tenths of a point higher than was budgeted for the year. Missing the budget mark will cause an 18-billion euro imbalance. So, the Ministry of Employment is trying to find a way to contain excessive manager salaries that workers compensation managers earn in hopes of extending labor reform practices to this are of government.
The ministry's reforms would create a salary cap of 100,000 euros, which is a 56% cut. Despite the cuts, manager pay could reach 158,000 euros annually on average. This is a hard salary to stomach given officials wanted to start curbing manager pay in 2010. Their success has been relative, because they warred against senior managers who had acquired many privileges. Only newly-appointed managers will face salary caps -- the same caps that apply to Social Security directors.
The problem involves more than just base salaries, but also other benefits and cash payments, which are much more difficult to control. Some managers have earned half a million euros per year in supplemental income. This shows that public sector cutbacks have not always gone to the root of the problem.
The newest round of reforms is still pending, and as for the benefits societies where private companies operate using public money, it is necessary to cut manager pay and avoid a situation where taxpayer euros get mixed up or viewed the same as salaries from private business activities.
