Welfare System Needs More Reforms, Greek Officials say

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.

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 China’s Xinhua News Agency in Athens in recent interviews.

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

With the Greek economy shrinking 25% 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 is facing 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.

According to the Greek government report, state expenditure for social benefits in 2013 was about 12.3% of GDP for pensions, 6.6% 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%, leaving Greece lagging behind other EU countries in terms of per capita health care spending.

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

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

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%.

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

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 program this autumn.

Source: Xinhua