Regulating the poor. The Greek Guaranteed Minimum Income

A considerable challenge

From a strict policy management perspective, this scheme represents a breakthrough. It rationalises social protection using a technology that did not exist in Greece, targets the poor who were previously largely deprived of social protection, and provides them with meagre relief through cash and in-kind transfers. Moreover, according to the OECD’s Government at a Glance 2021 dataset (Figure 3), government expenditures for social protection declined 13.3% between 2011 and 2019 (from € 41.846 billion to € 36.267 billion) notwithstanding the specific expenditures for the GMI programme (€ 501 million in 2019). However, does budgetary rationalisation and in particular the redeployment of social protection expenditure towards the extremely poor qualitatively improve their living conditions?

Figure 3: Public expenditure by function

The stakes are high for the populations targeted by the scheme. Reliable statistical data on living conditions, precariousness and poverty in the municipalities of West Piraeus are not available because the current population census (2021), which should include a lot of local data, has not been completed and cannot yet be compared to the previous one (2011). However, important recent anthropological research (Spyridakis, 2013, 2018; Bithymitris, 2016) has explored the trajectories and hardships suffered by the populations dependent on the shipbuilding and repair Zone of the port of Piraeus, the main employment area, and describes social situations that we also observed or that were reported to us during our survey. From the 1980s onwards, the disappearance of activities directly or indirectly linked to the shipyards and the destruction of other activities located in Piraeus (tobacco, textiles, fertilisers, metallurgy, flour mills, etc.), followed by the structural adjustment policies of the 2010s, have unraveled the economic, professional, social and family environment of the workers and merchants of this sub-region, where demand for labour is now very limited, while the labour reserve is over-abundant. Small shop-keepers are proletarianised, over-indebtedness crosses the social classes, and families are dissociated.

Accessibility and non-discrimination

The improvement of living conditions raises a first important issue: are needy citizens treated fairly “solely on the basis of their poverty status and without categorical exclusions” (WB, 2019a)? Reformulated from a normative perspective, this question addresses one of the core contents of USP: its accessibility. Accessibility means, among other requirements, that programmes must be based on the principles of non-discrimination and equality. For only those “mainstream”vulnerable groups who reached the social services during our study (the most marginal ones tend to be left by the wayside), a few observations are worth mentioning.

Means-tested schemes are individualised mass management technologies: the “poor masses” (a “universal” category), are processed by addressing each individual situation. Reconciling the particular and the universal is a difficult conceptual problem to solve. We observed and/or were told that mismatch situations between welfare-seekers’ accounts and online information often occur. Causes greatly vary, one of them being that the margin of error of the information system in determining eligibility is quite large. In such situations, past experience in social services plays an important role, both because employees received only summary training merely to operate the computer programme (many are unable to read and understand tax returns, which are key documents in handling applications), and because they have substantial discretionary power in processing applications.

As a result, practices vary from inexperienced and poorly educated employees who simply follow the instructions on their screens, to those who dig deeper. In addition, targeting mechanisms introduce arbitrary differences between recipients. For example, why is a disability allowance paid by the state combined with a GMI allowance when the same benefit paid by a social insurance is not? Why is the child allowance (€70) deduced from GMI allowances, when USP is designed to invest first and foremost in children? The assessment of individual situations is so complex that the authorities have even introduced dubious judgement criteria such as outward signs of wealth (perhaps inherited from a brighter past) to detect suspected fraudulent behaviours. Many more examples could be provided. Thus, political considerations underlying the classification of social groups and problems inherent in means-tested technologies result in infringements of anti-discrimination principles.

A “productive“ shadow economy?

Two other core contents of USP—availability of sustainable social protection mechanisms, and adequacy of basic welfare entitlements (“in amount and duration for everyone to realise his/her rights”)—lead a discussion on the amounts of cash transfers and work.

Most researchers and experts, as well as national officers and the social workers we spoke to, note that income transfer levels are so stringent that most GMI recipients will “not make it over the [relative] poverty line” (WB, 2019a). Likewise, they regret that Pillar 3 (labour market activation) is deficient. It is indeed questionable whether absolute minimum benefits in cash or kind such as those offered by the GMI are likely to empower and enhance the and capabilities of the poor in the sense of human development. With this in mind, the debate usually evolves around three main issues: undeclared work, the need to strengthen the Greek Manpower Employment Organisation (OAED), and the impossibility to increase the amounts of cash benefits both because allowances at less than low wages are supposed to make work attractive, and for budgetary reasons.

This conversation seems fruitless for several reasons. First, the budgetary arguments put forward by the authorities are unassailable due to the asymmetry of international power relations. Greece is still subject to an enhanced surveillance regime and has no fiscal room for manoeuvre. The 2015 memorandum prescribed a “fiscally neutral” social protection system which implied financing the scheme by achieving primary budget surpluses through social spending cuts and tax increases. The IMF and the EU exclude the possibility of a more substantial redistribution, for example by transferring part of the defence budget to social protection. Therefore, the inadequacy of the solidarity income in relation to the possibilities of human development calls for a reflection on the need for a Global Fund (if only a European Fund) for social protection to finance Floors in poorer countries (de Schutter and Sepúlveda, 2012).

Second, as we were repeatedly told, “everyone knows that everybody is moonlighting”. Undeclared work (and more broadly the underground economy, which concerns both low and high earners) has always been a structural feature of the Greek economy. It may also be considered a structural feature of GMI assistance, which is insufficient for the poorest to live on. Third, the authorities are doing their best to step up Pillar 3, using standard public policy instruments such as registration with the OAED and public employment programmes. The latter include non-renewable six to eight months fixed-term contracts paid around €500 monthly if full time, €250 if part-time. These amounts parallel the low wages offered on the market and do not generate the conditions for substantive improvements of people’s lives. In addition, back-to-work schemes, which are supposed to improve the employability of the unemployed, are not a panacea. In the particular case of workers in the Zone, especially those over 40, they have always been confronted with a structurally flexible labour market, with casual and precarious employment. Having struggled for their daily wages, they know how to look for work and change their employment status according to the opportunities that arise. What then is the point of extolling the superior value of incentive-based activation policies?

The WB has answers to that. Its core idea, which practically also seems to be the EU’s, is that the poor are a productive factor that should contribute to economic development, regardless of whether they do so in the informal sector—defined as labour and business that is hidden from monetary, regulatory, and institutional authorities. The Bank now sees that sector as a potential “engine for growth” (WB, 2019b). Once it is considered as such, informal employment becomes a relatively tolerable complement to devices such as public work programmes, which are a strong alternative model to unconditional cash transfers for the poor.

Concluding remarks

Further research is needed assess how the shadow economy is driven by but also fuels social vulnerability. If, as GMI beneficiaries often say, the allowance is “at least something”, it only involves adaptations to current degraded socio-economic conditions rather than their transformation. In Greece, large but differentiated vulnerable populations are not being given the means to live decent and meaningful lives, the cash transfer and other mechanisms being tailored to other purposes.

[1] Also known as social solidarity income—KEA in Greek—before January 2021.

[2] Relative poverty refers to annual incomes below 60% of national median disposable income. Extreme poverty in the case of the GMI refers to incomes below the 40% threshold, i.e. annual incomes not exceeding €2,880 in 2017 (WB, 2019a).

[3] This research was supported by the French School of Athens

[4] There is an important literature on social investment. See e.g. Jenson (2010) and Jenson and Saint-Martin (2003). Interestingly, the concept has now entered the public debate in Greece (Matsaganis, 2021)

[5] ILO and WB(2015). For a more detailed analysis, see Burgi and Kyramargiou, 2021.

[6] See https://ec.europa.eu/info/strategy/priorities-2019-2024/economy-works-people/jobs-growth-and-investment/european-pillar-social-rights/european-pillar-social-rights-20-principles_el