Is social protection in Greece at a crossroads?

ABSTRACT

This paper critically examines the limitations and deadlocks of welfare patterns embedded in the statist-familialist regime that for a long-time has been pivotal for the institutional set up and processes of social redistribution in Greece. Changes to social protection under the combined effect of conflicts and impasses of this regime, and of an intractable sovereign debt crisis (largely due to accumulated deadlocks) that has engulfed the country since the late 2000s are our main focus. Current welfare reforms across major policy areas are examined, with the aim to foreshadow the direction of impending change; and, particularly, to trace any indications of whether reform can bolster ‘inclusive solidarity’ and improve redistribution or, instead, will bring about heightened insecurity.

Key words:

• familialist regime
• statism
• austerity measures
• welfare retrenchment
• pension reform
• health
• social care

Notes

1. This is a research paper written in the context of the CABISE project (Capitalismo de bienestar en el sur de Europa: una evaluación comparada), under the ‘Plan Nacional de I +D+i, Spain’ (programme code CSO2012-33976). A first draft was presented at the 19th International Conference of Europeanists, in Boston Mass., 22–24 March 2012.

2. Major macroeconomic parameters of the crisis (among others, inherent flaws of the Euro project, persistently bad public finances and other systemic defects of Greece's economy) are outside the scope of our analysis.

3. Youth unemployment jumped to a record high of 59.2%. Unless otherwise stated, statistics are taken from the web pages of either Elstat at http://www.statistics.gr or Eurostat at http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ (last update 30-05-2013).

4. And about a quarter in Sweden, a high social spending country.

5. Indirect taxes amount to about 60% of total tax revenue; tax dodging is around 5bn Euros a year, while the informal economy is estimated to about 30% of GDP (Vassardani 2011).

6. The purchasing power of average wage and salary earnings dropped by 50% in 2011–2012, as the combined result of a (on average) 23% reduction of incomes, rising prices and a tax raid (Kouzis 2012: 4). Gross average earnings are forecasted to further drop in 2013 (by over 8%, in real terms; Bank of Greece 2012).

7. On food, cigarettes, gasoline and electricity. Also, in late 2012, heating oil tax increased six-fold.

8. As for instance the (highly unpopular) ‘extra’ property levy introduced in 2011 as a temporary measure initially to plug a hole of 2bn Euros in the 2011 budget, but later on decided to be sustained in the following years’ budgets. It is a kind of poll tax charged (through the electricity bill) to all users of property under threat of having their electricity cut. Given the rather small payment margin between old and new property, its effect on perverse redistribution is obvious. After public outcry over the unfairness of the measure a decision was taken by the government to exempt some categories of highly vulnerable groups. Recently a high court ruled that cutting off electricity for non-payment of the levy is unconstitutional.

9. An umbrella organisation (ETAA, the Social Insurance Fund of Independent Professionals) embraced the social insurance schemes of liberal professions, while their administrations kept a considerable degree of autonomy.

10. New legislation also increased the retirement age to 67 years from January 2013.

11. In addition, a revised list of ‘arduous and unhygienic’ jobs, which highly reduced the number of workers enjoying specific benefits and early retirement conditions, has been into effect recently.

12. IKA lost 4.2bn Euros in 2010 and 2011, according to the ex-Minister of Labour and Social Insurance, G. Koutroumanis (accessed at http://www.tovima.gr/finance/article/?aid=441353) and the downfall of revenue continues.

13. Not to mention the policy followed for many years in the (distant) past by Greek governments allowing them to use IKA's surpluses (with negligible return) for subsidising firms, which strongly contributed to bring IKA's finances into red in the 1980s (Petmesidou 2006a: 50).

14. The panic created by the pension reform, in parallel with drastic cuts in earnings act as strong push factors to retirement.

15. A levy to auxiliary pensions over 300 Euros monthly (ranging from 3% to 4%) was introduced in September 2011 too.

16. Strikingly, the law stipulates that part of the resources of this fund can be used by cash-strapped local authorities to finance ‘home help’ programmes addressed (on a strict means-testing basis) to the neediest elderly people. Indeed, a policy measure that follows the trodden path in Greece of blurring insurance with social assistance.

17. Under the fourth bailout revision a further cut ranging from 5% to 20% of total gross monthly pension incomes over 1000 Euros took place in January 2013.

18. Cut-off point: 60% of the median income.

19. 82.7 and 66.8 years respectively for women; 77.8 and 66.1 years respectively for men (in 2009).

20. A steep increase characterises also pharmaceuticals expenditure by social insurance organizations. According to the Ministry of Labour and Social Insurance, from 2000 to 2009 drugs expenditure rose by 400% in IKA (from 583m to 2.4bn Euros) and by 450% (from 279m to 1.2bn Euros) in OGA.

21. Providing for an upfront payment in cash of part of the debt, while for the remainder zero coupon bonds were offered.

22. A 25 Euros fee per hospital admission will also be in force from January 2014.

23. Piloting of Diagnosis-Related-Groups led to costly results prompting reconsideration.

24. See Newspaper ‘Avgi’, 15 November 2011, accessed at http://www.avgi.gr/.

25. See Newspaper ‘Eleftherotypia’ 19 April 2011, accessed at http://www.enet.gr/.

26. In Greece there are 3.2 nurses per 1000 inhabitants, while in Sweden the respective rate is 30 and the OECD average 9.6 (Petmesidou 2011c: 23).

27. For an analysis corroborating this perspective see also Papadopoulos and Roumpakis 2012.

28. Also, economic crisis conditions accentuate multigenerational living. Persistently high youth unemployment exacerbates the financial difficulties young people encounter, if they want to live independently. Hence the rise of the so-called ‘boomerang generation’, that is, young people moving back home for financial reasons. Under these conditions women carry a double burden, struggling to care for ailing parents, adult children and grandchildren.

29. The minimum wage is the benchmark for all higher wage rates and of the unemployment benefit.

30. According to information from the Labour Inspectorate, in 2011, full-time contracts were reduced by about one fifth, while part-time contracts and job rotation significantly increased; and these trends continue.

Additional information

Notes on contributors

Maria Petmesidou

Maria Petmesidou, Professor of Social Policy at Democritus University of Thrace and Fellow of CROP/International Social Science Council. Her research interests are in the comparative analysis of social welfare, poverty and social exclusion in Southern Europe and the broader Mediterranean region; social stratification and social development; labour market and employment policies. She has published many books, chapters in edited volumes and articles in journals. Recent publications (in English): What future for the middle classes and ‘inclusive solidarity’ in South Europe, Global Social Policy, 2011; Southern Europe, in: International Handbook of the Welfare State, Routledge, 2013; Is the crisis a watershed moment for the Greek welfare state? The chances for modernization amidst an ambivalent EU record on ‘Social Europe’, in: The Greek Crisis, Palgrave, forthcoming. E-mail: [email protected]