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Reducing extreme poverty in Greecethe role of a guaranteed minimum income scheme
Manos Matsaganis Athens University of Economics & Business
Chrysa LeventiUniversity of Essex
EUROMOD Research WorkshopLisbon (2 October 2013)
guaranteed minimum income general idea
ultimate safety net covers basic needs in situations of extreme poverty tops up income if below a certain threshold
means-tested funded out of general taxation
aims at reducing extreme poverty may not influence relative poverty reduces poverty gap
guaranteed minimum incomemore than just a benefit
usually requires availability for work
unless the claimants are disabled, unable to work or looking after small children
accompanying actions
social work, training courses, volunteering etc.
active employment policies: incentives for employers and employees
schooling, language courses, participation in rehabilitation programmes etc.
guaranteed minimum income in Europepolitical support
not a politically contested issue
supported by
British liberals
Nordic social democrats
German christian democrats
French socialists
guaranteed minimum income Northern Europe
guaranteed minimum income (€ per month)
single person couple couple + 2 children
UK 324 508 1108
Ireland 806 1347 1605
Sweden 326 589 1123
Denmark 1391 2782 3698
Finland 461 853 1466
Norway 694 1152 1856
Ιceland* 794 1271
* Data for 2010Source: MISSOC (Jan 2012)
guaranteed minimum income Central Europe
guaranteed minimum income (€ per month)
single person couple couple + 2 children
Austria 773 1160 1438
Βelgium 770 1027 1356
France 475 997
Germany 374 674 1176
Netherlands 668 1336
Luxemburg 1283 1925 2158
Source: MISSOC (Jan 2012)
guaranteed minimum income Eastern Europe
guaranteed minimum income (€ per month)
single person couple couple + 2 children
Czech Republic 123 234 388
Slovakia 61 105 158
Hungary* 80 134 134
Poland 94
Slovenia 231 399 565
Εstonia** 77 138 261
Lithuania 101 182 324
Latvia 57 114 242
Romania 29 52 90
Βulgaria 33 44 104
* Max benefit amount ** Data for 2011Source: MISSOC (Jan 2012)
guaranteed minimum income Southern Europe
guaranteed minimum income (€ per month)
single person couple couple + 2 children
Italy*
Spain 426 596 1193
Portugal 195 332 528
Greece
Cyprus 452 678 949
Malta 415 450 521
* Varies by municipalitySource: MISSOC (Jan 2012)
guaranteed minimum income in Greecethe position of international organizations
IMF (Country Report No. 12/57, 2012)
promoted the idea GMI would replace most existing benefits (other than
unemployment benefit) targeted at the bottom 20% of the income distribution
OECD (OECD Review of Greek Social Programmes, 2012)
rejected the idea counter-proposal: consolidate existing family, housing,
unemployment and disability benefits on a means-tested basis
politically contested issue?
guaranteed minimum income (GMI)previous studies
Matsaganis et al. (2001) cost: 0.23% of GDP (ECHP 2000)
Legakis (2005) cost: 0.55% of GDP (EU-SILC 2003)
Flevotomou (2009) cost: 0.45% of GDP (HBS 2004)
Matsaganis & Leventi (2009) cost: 0.92% of GDP (HBS 2005)
guaranteed minimum income (GMI)scenarios
three alternative scenarios
scenario 1 GMI = unemployment insurance benefit = social pension
€360 per month (single person)
scenario 2 GMI= unemployment assistance benefit for older workers
€200 per month (single person)
scenario 3 GMI = 40% of median equivalised HDI
€269 per month (single person)
housing allowance €125 for those with rent / mortgage expenses plus €25 for each each additional family member
guaranteed minimum income excl. housing allowance
no expenses for rent or mortgage scenario 1 scenario 2 scenario 3
single person 360 200 269
single parent + one child 540 300 403
couple 612 340 457
couple + 1 child 792 440 592
additional amount for any extra adult 252 140 188
additional amount for any extra child 180 100 134
guaranteed minimum income incl. housing allowance
with expenses for rent or mortgage scenario 1 scenario 2 scenario 3
single person 485 325 394
single parent + one child 690 450 553
couple 762 490 607
couple + 1 child 967 615 767
additional amount for any extra adult 277 165 213
additional amount for any extra child 205 125 159
guaranteed minimum incomebenefit calculation: couple + 2 children with expenses for rent
no GMI scenario 1 scenario 2 scenario 3
household income 744
from employment* 234
from social benefits 360
from rent 150
reference income 698 698 698
guaranteed income 1172 740 926
transfer 475 43 229
* 20% of employment income is not taken into account
guaranteed minimum income participation (2012)
scenario 1 scenario 2 scenario 3
number of recipients1 1 680 688 707 898 1 045 074
as % of population2 15.4% 6.5% 9.6%
1. All household members are considered as recipients if one of them is in receipt2. Population in 2012: 10 928 115 inhabitants Source: EUROMOD (Version F6.43)
guaranteed minimum income cost (2012)
scenario 1 scenario 2 scenario 3
in million € 2 374 798 1 317
as % of GDP1 1.2% 0.4% 0.7%
1. GDP in 2012: €193,7 billionSource: EUROMOD (Version F6.43)
guaranteed minimum incomepoverty effects (2012)
no GMI scenario 1 scenario 2 scenario 3
poverty risk (60% of median)
21.3 15.7 21.3 20.9
change (in pps)
-5.6 0.00 -0.4
poverty risk (40% of median)
10.5 2.2 8.7 5.5
change (in pps)
-8.3 -1.8 -5.0
poverty gap (60% of median)
41.1 19.1 31.2 24.9
change (in pps)
-22.0 -9.9 -16.2
Source: EUROMOD (Version F6.43). Underlying dataset: EU-SILC 2007, adjusted for unemployment
guaranteed minimum incomepoverty risk estimates by household type (60% of median)
no GMI scenario 1 scenario 2 scenario 3general population 21.3 15.7 21.3 20.9single or couple (both below 65)
19.9 15.8 19.9 19.8
single or couple (at least one over 65)
18.7 18.3 18.7 18.7
couple with 1 or 2 children
24.2 15.0 24.2 23.7
couple with3+ children
32.1 15.7 32.1 29.4
single parent families
32.4 24.4 32.4 31.6
other household types
17.7 14.4 17.7 17.7
Source: EUROMOD (Version F6.43). Underlying dataset: EU-SILC 2007, adjusted for unemployment
guaranteed minimum incomepoverty gap estimates by household type (60% of median)
no GMI scenario 1 scenario 2 scenario 3general population 41.1 19.1 31.2 24.9single or couple (both below 65)
54.1 27.3 37.8 31.1
single or couple (at least one over 65)
23.1 17.9 21.7 20.9
couple with 1 or 2 children
49.9 22.0 34.4 25.6
couple with3+ children
35.3 15.6 27.8 21.4
single parent families
41.7 15.9 33.1 24.3
other household types
35.4 15.1 30.0 24.3
Source: EUROMOD (Version F6.43). Underlying dataset: EU-SILC 2007, adjusted for unemployment
guaranteed minimum incomeprospects (1)
a useful tool for poverty alleviation at (relatively) modest cost for the modernisation of the Greek social protection system
urgent need for strengthening the social safety net the crisis has increased the demand of social protection …but the austerity has reduced its supply
obstacles budgetary practical administrative political
guaranteed minimum incomeprospects (2)
guaranteed minimum income on the spotlight
2013-2014 Spending Review: (further) massive fiscal consolidation 5% of GDP in 2013 + 2.25% in 2014 cuts in social spending: 45% of total savings increases in social contributions: 5% of total savings
some expansionary measures (subject to strict cash limits) new means-tested child benefit (2013) new unemployment insurance benefit for the self-employed (2013) broader eligibility conditions for unemployment assistance benefit minimum income pilot (to be implemented in two localities in 2014)
guaranteed minimum incomeprospects (3)
the pilot: a unique opportunity (not to be missed)
issues political priority? administrative preparedness? careful design? systematic monitoring? ex post evaluation?
watch this space!
Thank you very much for your attention!