The Introduction of a Universal Social Safety Net in Greece

Notwithstanding the fact that political debate on the need to implement a guaranteed minimum income scheme (GMI) that began in 2000, it was only with the onset of the economic crisis that such a programme was introduced into Greek legislation. In the context of the 2nd Memorandum of Understanding that was signed (March 2012) between the Greek authorities and the “Troika” – the European Commission, the European Central Bank, and the International Monetary Fund – the Greek government went ahead with a means-tested income support programme for the first time1.

The adoption of the GMI was dictated by a twofold rationale. First, the programme would serve as a typical social safety net, aiming at direct help for households falling below a specified extreme poverty threshold due to the negative consequences of the fiscal adjustment and consequent austerity measures. Second, a nationwide universal programme would act as a vehicle towards the rationalization of existing social welfare programmes that had long been criticized as fragmented, poorly targeted and ineffective in terms of poverty alleviation and inequality reduction.

Implementation

The first GMI scheme was piloted in November 2014 for a period of six months in 13 selected local authorities across the country. After an impact assessment of the pilot, which revealed significant shortcomings, the programme’s parameters and operational procedures were revised and adjusted.

In July 2016 the first phase of the GMI, renamed Social Solidarity Income (SSI), launched in 30 local authorities across the country while national implementation began in February 2017. SSI is based on an innovative IT system, which constitutes the very backbone of the programme and cross-links electronically, in real time, information from several government databases. This results in a substantial reduction in the administrative burden for applicants and speeds up decision-taking on eligibility2.

Following the basic principles of typical GMI schemes, the programme aims at combining income support (first pillar) with fostering social inclusion (second pillar) and labour activation measures (third pillar). As regards the second pillar, a bouquet of complementary social services and goods is gradually offered to SSI beneficiaries. Implemented both at national and municipal level, the second pillar includes material assistance provided by the Fund for European Aid to the Most Deprived (FEAD), socially adjusted tariffs in electricity and water, discounts or exemption from municipal taxes, access to counselling, referrals to support structures such as social groceries and pharmacies, free access to museums, etc.

As far as third-pillar implementation is concerned, since August 2018 all unemployed benefit recipients capable of working must register with the national employment organization (resulting in a 15 per cent increase in registered recipients). Moreover, a pilot project for the interconnection of SSI recipients with the social support and labor market activation pillars took place during 2019. SSI recipients were linked to OAED’s (Employment Agency) new pro­filing methodology, aimed at producing an individualised action plan and participating in active labour market policies.

Regarding basic figures on the scale of the programme, according to the latest monitoring report (Ministry of Labour and Social Affairs 2019), 245,737 households, or a total of 464,620 individuals, approx­imately 4.3 per cent of the Greek population, receive the benefit. Of the accepted applications, 53.5 per cent come from single-member households and 8.6 per cent from single-parent families. About 45 per cent are registered as unemployed, constituting the pool of beneficiaries for third pillar activation measures. The overall annual budget amounts to €850 million.

Evaluation

Throughout the period of implementing the programme and until mid-2019, technical assistance was provided by the World Bank. In this setting, the impact of the programme has been evaluated after one-and-a-half years of nationwide implementation. The impact assessment, delivered to the Greek authorities in January 2019, highlights strengths and innovative qualities and identifies specific weaknesses of the Greek programme (The World Bank, 2019).

In particular, distributional analysis shows that almost 60 per cent of SSI recipients belong to the lowest decile3 while 80 per cent of them are classified as poor when Eurostat’s extreme poverty definition4 is adopted. What is more, the programme’s budget is allocated effectively, as almost 85 per cent of funding resources reach poor households. As far as adequacy is concerned, the level of benefit significantly contributes to household budgets, given that 70 per cent of these assessed its importance as “very significant”. Not surprisingly, the SSI does not have much of an impact on poverty incidence and inequality, but it does reduce quite significantly the severity of poverty.

On the other hand, even though the eligibility threshold almost coincides with that of the poorest decile, less than 40 per cent of the households within the decile receive the benefit. Another alarming issue is the proportion of single-member households in comparison with the general population. This highlights the difficulty in identifying the real household composition to be eligible for the programme. Finally, the limited implementation of the third pillar was pinpointed as key to the programme’s overall impact.

Future challenges

Effective activation and consequent return to the labour market – the objective of the third pillar – provides recipients with a ticket to independence from social assistance and is therefore a key indicator for SSI success.

At the same time, the implementation of the third pillar also constitutes the ultimate challenge for the programme. It is among the Greek authorities’ main priorities to rapidly and comprehensively implement projects that will boost beneficiaries’ employability and bring together all implementing authorities: local OAED offices, community centres and local authority social services. When fully developed, recipients will be able to engage in job search programmes, skills training and other support activities.

Furthermore, noting that the level of benefit has remained stable since the start of the programme, it is important for the scheme to be continuously adapted to households’ needs and a benefit rate adjustment mechanism is required. Such a mechanism could be activated every two years, enriching the dynamic features of the programme, and could be anchored either to the poverty threshold as defined by the Hellenic Statistical Authority or the minimum wage.

Last but not least, an improvement in benefit tapering (currently, the only analogous provision disregards 20 per cent of earned income from income used to calculate eligibility) would further reduce work disincentives. The ongoing debate and rich experience of many European countries can serve to highlight sound practices in this regard (see for example European Commission 2019).