allowances

More than €3 billion was given by the government in OPECA benefits (basic, family and social) in 2023, while Prime Minister Kyriakos Mitsotakis said in an interview on Thursday that the government spends about €4 billion annually on benefits. But to what extent do these costs take place?

According to the most recent data from ELSTAT on the risk of poverty in Greek society for 2022, social benefits correspond to a reduction of the risk of poverty by only 4.2%, while in the previous year (2021) this percentage amounted to 4.8 % and in 2020 to 4%. On the contrary, the contribution of pensions to reducing the risk of poverty is much greater (22% in 2022, 22.5% in 2021 and 23.5% in 2020).

In its annual report on the Greek economy, the Bank of Greece underlines that the fiscal multiplier of social spending in Greece is low, which means that the performance of benefits is not targeted, with the money being dispersed to wider income strata.

For this reason, the CoE proposes the establishment of more careful selection criteria for the beneficiaries of social expenditures, which should be combined with the limitation of tax evasion in order to direct the benefits to those who really need them.

Benefits achieve their goal to a greater extent among minors (0-17 years), as they save 6.6% of the population from the risk of poverty, from 28.4% to 21.8% of the total (impact of benefits: 23%).

At ages 18-64, benefits lower the poverty rate from 22.8% to 18.6% of the population (benefits effect: 18.5%). In the third age (65+) the contribution of benefits is only 11%, reducing the poverty rate from 19.8% of the total to 17.6%.

The reduced influence of benefits on older fellow citizens is explained by the fact that the majority of them receive a pension, which lifts 2 out of 3 out of poverty.

According to the data of ELSTAT, single-parent families have the greatest need for further support, which are below the poverty threshold at a rate of 37.1% after the payment of benefits.

Geographically, the greatest risk of poverty is faced by the inhabitants of the Peloponnese, Western Greece and Western Macedonia, with rates of over 30%. It is noted that the poverty threshold is set at 60% of the median income, according to Ergani data, and amounts to 6,030 euros per year for a one-person household and 12,663 euros for households with two adults and two dependent children under the age of 14.

And all this, when Greece shows the largest real reduction in wage income since the financial crisis until 2022, compared to the rest of the European countries. According to OECD data, this reduction amounts to 30%, when Spain measures losses of 10%, while Italy around 8%.

Even less the Netherlands and borderline Ireland. The rest of the countries show an increase in real wages, with Poland in first place (30% increase).

Source: Premium edition TA NEA