Greece's welfare system needs more reforms to provide lifeline to most vulnerable

Source: Xinhua| 2017-08-23 01:46:50|Editor: Mu Xuequan
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by Maria Spiliopoulou

ATHENS, Aug. 22 (Xinhua) -- Greece's recession-hit welfare system needs further reforms to keep providing a lifeline to the most vulnerable members of society, Greek officials and experts said.

The country's welfare system will go under the microscope once again when international creditors carry out their third review of the third Greek bailout this autumn.

Weakened by chronic shortcomings, the system came under enormous strain due to austerity cuts during the seven-year Greek debt crisis, but it still offers a minimum safety net to suffering Greeks, local officials told Xinhua in Athens in recent interviews.

NGOs and private fundings have filled the gaps in recent years, but a new system is needed to ensure adequate social protection of Greeks in the future, experts added.

"Due to the economic crisis, we not only have less human and financial resources to provide for social services, but also we have very strict procedures for public spending due to austerity measures. As a result, the contribution of private funding and volunteers is crucial," said Maria Stratigaki, vice mayor of Athens for social solidarity, welfare and equality.

The Greek state provides a number of social services such as quasi-universal health care, education, and pensions, as well as unemployment, disability and family benefits. In state budgets before the debt crisis, expenses for the welfare state and education system were more than 30 percent.

With the Greek economy shrinking by 25 percent in the years of the crisis, a quarter of the work force losing their job-based insurance, and spending cuts on pensions, health care and education, the system faced unprecedented pressures.

The debt crisis exposed weaknesses of a system which suffered from unbalanced protection of groups (emphasis on old age rather than family), low efficiency, inequality in funding, and corruption, among other problems, according to a fact sheet released by the Greek General Secretariat.

Austerity measures exacerbated the challenges. Expenditure on social policy in Greece in recent years gradually declined to 24 percent of cross domestic product (GDP) in 2014, according to an Organisation for Economic Co-operation and Development (OECD) report.

Eurostat data show that Greeks receive 70 percent of the EU average in social benefits, Greek officials noted.

According to the Greek government report, state expenditure for social benefits in 2013 was about 12.3 of GDP for pensions, 6.6 percent of GDP for health, 1.4 for family and 1.1 for unemployment.

The downward trend continued in subsequent years. In 2015, according to OECD, public spending on health fell to 5.3 percent, leaving Greece lagging behind other EU countries in terms of per capita health care spending.

Recession-hit Greeks still have to pay about 40 percent for medical aid on average, while the state covers the 60 percent, according to OECD data.

General government expenditure on education in Greece was at 4.4 percent of GDP in 2014, according to Eurostat, below the EU-28 average of 4.9 percent.

In the Greek welfare system, pensions are traditionally a significant support for the whole family. In the years of the debt crisis, with more than half of young Greeks jobless, solidarity between generations is more essential than ever.

According to a recent survey of the Greek National Statistics Authority (ELSTAT), 52 percent of households in Greece today live on the pensions of their older members.

According to labor ministry data, the average pension in Greece currently stands at 664 euros (783 U.S. dollars) per month and supplementary pension at 168 euros before tax.

Greek pensioners have suffered a dozen cuts since 2010 and, in addition to tax hikes, their average income has declined dramatically. According to pensioners' unions, the average main pension has shrunk by 45 percent.

As a result, 23 percent of Greek retirees face the risk of poverty, while the average for the 28 EU member states is 17.8 percent, according to 2014 Eurostat data.

Throughout the crisis, Greek government took steps against the mismanagement of funds in parallel with relief measures to support the most vulnerable groups of society, like ensuring access to health care for the 2.5 million Greeks who were left uninsured after losing their jobs or giving one-off benefits to low-income pensioners.

For experts like Manos Matsaganis, an associate professor at the Athens University of Economics and Business, such measures are a drop in the bucket. In order to safeguard the sustainability of Greece's welfare system, there is urgent need to revamp and rationalize the entire framework, he said.

Monthly benefits awarded to low-income individuals or families with three or more underage children, housing stipends for eligible university students or disability payments and heating oil subsidy allocated by the Greek state are inadequate.

In its latest assessment of the Greek pension system in February this year, the International Monetary Fund (IMF) staff noted that the reforms made so far go in the right direction by removing some distortions and reducing costs.

However, the entire system must be re-examined to offer affordable public services and efficient administration for all, Matsaganis told Xinhua. (1 euro = 1.17 U.S. dollars)