Europe’s companies, particularly those based in southern Europe, could find themselves bearing the cost of social security cutbacks, a European consultancy network has warned.

The warning accompanies the re-cently published report EURACS Pension Summaries, a survey of social security and pensions arrangements across Europe, compiled by EURACS member firms.

In a statement accompanying the report, EURACS secretary George Clare says: To companies operating occupational pension plans, danger signals centre around the manner in which company scheme benefits are integrated with social security. No company should provide benefits which the government cannot afford.”

The report warns: “The parlous state of the financing of some social security systems - particularly in southern Europe - is such as to cause some employers to be very cautious in accepting the supplementation of state benefits to adequate levels of income replacement.”

The report also says: “The concept of “harmonisation”, so close to the hearts of the Treaty of Rome draftsmen, is a long way from realisation.”

Concerning Italy, it says: “Legally required benefits have, for many years, been considered beyond the means of the national economy.

“However”, it continues, “there have been no successful attempts to cut back state benefits even though it has become increasingly apparent that current levels of legally required benefits cannot be maintained without substantial increases in contributions which are already the highest in Europe.”

For Spain, the report says that generous social security provision established in the 1970s has come under pressure in the last 10 years due to what it calls the “stagnant high level of unemployment” and the worsening demographic situation.

One specific concern is over the maximum level of social security pension. The report says that in 1983, a maximum pension was introduced with a level frozen for five years. Since then it has been revalued only at the inflation rate which is lower than the increase in the general earnings level.

It continues: “Salaries above the ceiling experience each year a deterioration of the state cover as the caps are not updated in line with salaries but just general inflation levels.”

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