Even with the prevalence of dollar indexation across the region, exchange rate appreciation would still help promote cheaper imports and higher living standards.

Most G8 countries seem incapable of achieving the political consensus required to take necessary steps such as raising the retirement age or significantly cutting the indexation of benefits to inflation.

Moreover, as public confidence in the de linked oil currencies increases over time, dollar indexation of private contracts will diminish, and currency movements will have a greater impact on overall prices.

Until 2002 pensions were indexed by the consumer price index on regular basis, however as of 2002 changes in the insurance contribution wages will also be taken into consideration in the indexation of pensions.

In order to prevent pathological inflationary dynamics from becoming embedded even more deeply in the structure of the economy (including through wage indexation), Volcker dramatically changed the policy stance and made inflation public enemy number one.

The granted pension amount is protected against inflation by regular pension indexation (once a year), taking into account the consumer price index changes and as of 2002 also a certain part of the insurance contribution wage index.

Regarding interest on or indexation of arrears, should the General Assembly decide to introduce interest charges on arrears, the rate should be fixed at a low level and should not have retroactive effect, and the annual rate should not exceed 1 per cent.

The Committee notes with concern the low level of the minimum wage, which is inadequate to provide workers with a decent living for themselves and their families, and the lack of a system of indexation and regular adjustment of the minimum wage to the cost of living.