HELLENIC PARLIAMENT

PARLIAMENTARY BUDGET OFFICE

MINIMUM INCOME SCHEMES IN EUROPEAN UNION

AND GREECE
A COMPARATIVE ANALYSIS

Interim Report

for the relevant Parliamentary Committees of the Hellenic Parliament

OCTOBER 2014
 TABLE OF CONTENTS

THE TARGETS AND SCIENTIFIC COMMITTEE OF THE OFFICE ............................................................... 4

PREFACE............................................................................................................................................. 5

INTRODUCTION.................................................................................................................................. 6

1 GUARANTEED MINIMUM INCOME SCHEMES IN THE EU............................................................ 7

1.1 BENEFITS IN CASH/BENEFITS IN KIND AND SERVICES, OR A COMBINATION OF THE TWO? .......................... 9
1.2 CRITERIA FOR ELIGIBILITY .............................................................................................................. 11
1.3 THE LINK BETWEEN GUARANTEED MINIMUM INCOME AND THE INTEGRATION TO THE LABOUR MARKET ........ 12
1.4 COVERAGE AND NON - TAKE UP ..................................................................................................... 13

2 GUARANTEED MINIMUM INCOME MODELS IN THE EU ........................................................... 15

2.1 THE GERMAN MODEL ............................................................................................................. 15

2.2 THE FRENCH MODEL ............................................................................................................... 17
2.3 THE ITALIAN MODEL................................................................................................................ 18
2.4 THE PORTUGUESE MODEL ...................................................................................................... 19
2.5 CONCLUSIONS FROM THE EU EXPERIENCE ............................................................................. 20

3 THE GREEK CASE ...................................................................................................................... 22

3.1 UNEMPLOYMENT AND POVERTY...................................................................................................... 22

3.2 MEASURES AGAINST POVERTY ........................................................................................................ 23
3.3 THE REFORM OF SOCIAL BENEFITS .......................................................................................... 23
3.4 THE PILOT IMPLEMENTATION OF GUARANTEED MINIMUM INCOME IN GREECE ........................................ 24
3.4.1 The financial ensuring of the Guaranteed Minimum Income System after the pilot
implementation ............................................................................................................................. 26
3.4.2 From the debate to the implementation, key matters arising. ......................................... 27

2
TABLES

TABLE 1: STATUTORY AND STRUCTURAL ORGANIZATION OF THE GUARANTEED MINIMUM INCOME .............................. 9
TABLE 2: BENEFITS IN CASH ......................................................................................................................... 10
TABLE 3: AMOUNT OF MINIMUM INCOME ..................................................................................................... 15
TABLE 4: GMI’S INCREMENT ....................................................................................................................... 16
TABLE 5: GMI’S MAIN CHARACTERISTICS - GERMANY ....................................................................................... 16
TABLE 6: MAXIMUM AMOUNT OF GMI PER HOUSEHOLD, FROM JANUARY 2007 ................................................... 17
TABLE 7: GMI’S MAIN CHARACTERISTICS - FRANCE .......................................................................................... 18
TABLE 8: GMI’S MAIN CHARACTERISTICS - ITALY.............................................................................................. 19
TABLE 9: GMI’S MAIN CHARACTERISTICS – PORTUGAL ..................................................................................... 20
TABLE 10: THE 13 MUNICIPALITIES OF THE PILOT IMPLEMENTATION .................................................................... 25
TABLE 11: CONFIGURING GUARANTEED MINIMUM INCOME UNDER MARITAL STATUS AND PROPERTY ........................ 26
TABLE 12: THE GMI BASED ON MARITAL STATUS (INCOME THRESHOLD) .............................................................. 26

3
THE TARGETS AND SCIENTIFIC COMMITTEE OF THE OFFICE

The Parliamentary Budget Office was established in the Hellenic Parliament according to law
3871 of the year 2010, regarding the fiscal management and responsibility. The Office is re-
sponsible for the monitoring of the State’s Budget implementation, the assistance to the
workings of the two committees of the Parliament (the Special Committee on the Financial
Statement and the General Balance Sheet of the State and on the Control of the Implemen-
tation of the State Budget and the standing Committee on Economic Affairs) and the draw-
ing up and submission to the above committees, of quarterly and annual reports regarding
the observance of the fiscal targets, which are set in the Mid-Term Programs of Fiscal Strate-
gy.

The Office is assisted by a Scientific Committee, which consists of the following members:

Professor Panagiotis Liargovas, Coordinator

Professor Panos Kazakos, Member

Assistant Professor Spyros Lapatsioras, Member

Professor Napoleon Maravegias, Member

Associate Professor, Michael Riginos, Member

The Committee delivers opinions on issues requested in writing by the Speaker of the Par-
liament, or, the Office Coordinator or the Parliamentary Committees mentioned above and
approves the quarterly and annual reports.

4
Preface

The Parliamentary Budget Office under the framework of its competences recognizing the
importance of configuration an effective welfare mechanism in Greece, prepared this inter-
im report entitled: «MINIMUM IMCOME SCHEMES IN THE EU AND GREECE: A COMPARA-
TIVE ANALYSIS».

The interim report-study is primary addressed to the members of the relevant Parliamen-
tary Committee, especially to the Special Committee on the Financial Statement and the
General Balance Sheet of the State and on the Control of the implementation of the state
Budget and the standing Committee on Economic Affairs of the Hellenic Parliament. It aims
to support the workings of the two Committees by providing the necessary information and
data.

The note was discussed and approved by the Scientific Committee of the Office on Septem-
ber 11, 2014. Apart from its independent publication, it was also decided to be part of the
quarterly report of October 2014.

This note was drafted by Sophia Tsellou, Prof. PanosKazakos (member of the Scientific
Committee of the Office), Prof. Michael Riginos (member of the Scientific Committee of the
Office) and Prof. Panagiotis Liargovas (Coordinator of the Office).

The Coordinator of the Office

Professor Panagiotis Liargovas

5
Introduction

For six successive years Greece is facing a deep economic crisis that has significantly disman-
tled the country’s social tissue. However, unlike other European countries that implemented
programs in order to cope with social inequalities, Greece despite the fact that faces severe
situations of extreme poverty and social exclusion, seems to move slowly. The citizen’s de-
mand for social care is strong while the state’s supply is characterized by fragmentation and
administrative problems. Thus the social safety net is characterized by inefficiency while
there is no replenishment of income losses in the near future due to the economic down-
turn.

Society’s groups such as the long-term unemployed, the new entrants to the labour market,
workers without security, family men with low income, self-employed, the elderly and the
disabled need special care. These groups are experiencing debts accumulation, the loss of
purchasing power, income reduction and taxes increase.

The measure of Guaranteed Minimum Income came to Greece late. The first unsuccessful
attempt to institutionalize the Guaranteed Minimum Income, took place in 2000 during
Simitis Governance. In 2005 SYRIZA submitted in Parliament a second law draft for the es-
tablishment of G.M.I, which also did not proceed.

This study examines the Minimum income schemes in EU countries with a particular refer-
ence to Guaranteed Minimum Income and key issues related to its implementation.

6
1 Guaranteed Minimum Income Schemes In The EU

In the absence of a basic minimum income for all citizens, the European countries in order to
cope with poverty initiated GMI schemes. In recent decades, such policies have changed
from passive to active. The latter enable the poor to participate actively both in society and
in the labour market. However there are significant differences between European social
systems with respect to the applied policies of GMI which have to do with the amount and
the variety of benefits or with the terms of accessibility to them. The diversity of the G.M.I
term relates both to the specific terminology and the respective conceptual approach (e.g.
basic and guaranteed minimum income).1 The G.M.I is what we call a last resort, so people
do not fall below the economic threshold that is considered the minimum level of decent
living.

In 1992 the European community has placed particular emphasis on the State’s obligation to
a strong social model. It is no coincidence that the majority of countries implement G.M.I
policies. Exceptions are Italy, which unsuccessfully attempted to implement this measure,
and Greece. In Greece a pilot program is foreseen to be implemented for six months starting
in September 2014, and universally in 2015.

The main differences between European countries regarding the G.M.I, are due to two main
factors: (a) the differences between social systems in policy and institutional term and (b)
the historical, political and economic situation in which it is implemented. There are coun-
tries with strong state social systems, such as the Scandinavian countries, and countries with
more liberal social systems in which individual initiative plays a major role. We should not
forget that each state has a different standard of living therefore applies different G.M.I pol-
icies.

In almost all European countries, the right to minimum income takes the form of a subjec-
tive and non-discriminatory right. More specifically it is granted at the request of the inter-
ested person or family. Common prerequisite of G.M.I programs in order to grant income
support is to control the financial resources of potential beneficiaries and provide support
for their reintegration into the labor market.

All countries have made statutory provisions to meet the needs of citizens that are in need
because they luck income from employment or other sources. The G.M.I schemes have
grown significantly over the past 20 years but the scope varies from country to country. The
variability has to do with the overall policy that its country follows in terms of social protec-
tion. Hence the attempt to compare these systems is extremely difficult for the following

1
See: Nick Asproulakis, "Guaranteed Income: An introductory conceptual approach", 2010, pp.1-4 INE / GSEE, "The basic guar-
anteed income and the Politics of GMI in the EU-15," Studies ,9,December 2010, p. 9 The Basic Guaranteed Income (B.G.I.) is
guaranteed by the state to its citizens that they can meet their basic needs through a cash allowance without income or as-
sets. Here to emphasize that the B.G.I. is not inconsistent with the guarantee of employment. The fact that the B.G.I. is with
no conditions resulting from the status of citizen. The B.G.I. paid in cash at regular periods and provided on an individual ba-
sis regardless of income level. The B.G.I. is found in Alaska (USA) and Mongolia, in the form of a dividend of public natural re-
sources. Finally, B.G.I. is related to policies such as the negative income tax ,the social dividend , participation income, un-
employment benefits and the minimum wage. Fitzpatrick classifies B.G.I. based on social policies and conditions without pre-
conditions, thus clarifying any social measure associated with the B.G.I policy.

7
reasons: (a) different approaches with respect to the minimum subsistence level, b) different
entities each time, for the financing, management and GMI’s delivery. Depending on the
country, these are set at national, regional and local governance. Also, in some countries
non-governmental organizations are playing a special role. Finally, it is the decisive role of
each country’s economic climate and the existing labor market conditions.

On the basis of the expert’s reports, the minimum resource schemes can be divided into four
groups. In the first group there are those countries that have simple and comprehensive
schemes2( AT,BE,CY,DE,CZ,DK,FI,NL,PT,RO,SI,SE) which are open to people with insufficient
means. In the second group, there are those countries (EE, HU, LT, LV, PL, SK) that have sys-
tems which are defined as non-categorical. In the third group there are those countries (ES,
FR, IE, MT, UK) that have developed a complex network of different and often overlapping
schemes. These schemes mainly cover those in urgent need. In the last group, there are
those countries (BG, EL, IT) who have limited and piecemeal arrangements which are re-
stricted to quite narrow categories of people in need.3

Every European country has a system of guaranteed minimum resources. Greece acquired
such a system in recent years. Specifically it provided a rental fee, paid to unsecured and
financially weak elderly persons or in couples that do not own a house. Greece, unlike other
Member States, does not precisely define the term «inadequate standard of living».

The systems cover a large range of varieties of social amenities. For example Latvia has a
general non-contributory minimum scheme, incorporated in central (national) legislation.
The cabinet of ministers fixes the GMI level, while the municipalities are allowed to deviate
from these national guidelines and can establish a higher GMI lever but not higher level than
50% of the minimum benefit for persons receiving old-age and disability pensions. This re-
flects a certain degree of interaction between national and local policy level. There is a simi-
lar technique in Norway: there is no fixed amount of the minimum level by law but the Nor-
wegian ministry of labour issues guidelines on reasonable amounts in order to live decently.

2
Missoc Analysis (2011), Guaranteed Minimum Income Resources, For the European Commission DG Employment, Social Affairs
& Inclusion, May 2011
3
See: H. Frazer and E. Marlier (2009) ‘Minimum Income Schemes Across EU Member States’ (Synthesis Report) for EU Network
of National Independent Experts on Social Inclusion, available at:http://www.peer-review-social-inclusion.eu/network-of-
independent-experts/2009

8
 TABLE 1: Statutory and structural organization of the Guaranteed Minimum Income
Classification European-Members ΕU
Legislation at central Level CZ/RO/SE/SK/MT/NO

Legislation at local or re-

General Schemes
gional level

Territorial arrangement LV

Legislation at central Level EL/HU/UK/PL/FR/DE/CH

Legislation at local or re-

Specific Schemes AT
gional level

Territorial arrangement ES

Legislation at central Level BG/CY/DK/EE/FI/LT/SI/ΙE/LU/PT

Combination of General Legislation at local or re-

IT
and Specific Schemes gional level

Territorial arrangement BE/NL

Source: Missoc(2011).

Table 1 depicts distribution of G.M.I systems in the EU members on the basis of Members
state’s state administrative structure and constitutional law. As we can see in Italy legislative
competence has been transferred from the national level to regions or to the municipalities.
This is translated as a «mosaic» of various locally applicable schemes, either of a general or
specific nature. We can support that territorial diversification is mostly seen in countries
with federal structure. On the other hand in Belgium the benefits are organized at the fed-
eral level. On the contrary, in Spain for specific schemes the competences are spread over
both the national and the regional level. Finally, the G.M.I in Austria is regulated by different
legislative acts and regulations of the nine federations.

1.1 Benefits In Cash/Benefits In Kind And Services, Or A Combination Of The Two?

The G.M.I systems are a combination of benefits in kind and benefits in cash. The big majori-
ty of EU Members uphold the principle of cash benefits. Unlike, Members states that are
familiar with benefits in cash, benefits in kind are a minority. For example in Cyprus, bene-
fits in kind are related to free medical care. Benefits in kind are commonly observed in coun-
tries with decentralized structures (usually at the level of municipality or region, e.g. Italy
and Austria).

There are Member states which apart from cash benefits make use of so-called, top up ben-
efits. Top up benefits are considered a supplement on top of other incomes that comes from
employment, pensions and allowances.

9
 TABLE 2: Benefits in cash
Classification European-Members ΕU

Benefits in cash as guaran- Lump sum or varia- BG/CZ/BE/DK/FI/HU/LT/RO/SK/ML/NL/

teed minimum income ble amount of cash SI/PL/ES/IE/DE/LU

Top-up benefits CH

Combination of cash
benefits and Top up CY/EE/LT/UK/PT/FR
benefits

Benefits in cash as reimbursement or contribution

for life essential expenses(excluding housing and
SE/AT
heating allowances , medical expenses or other
additional refunds))
Source: Missoc(2011).

Switzerland is the only Member state that provides for top up benefits. Some Member
states combine both cash benefits and top up benefits. For instance, Cyprus has the special
allowance, of which the amount depends on the pension level (regular or social) that the
applicant enjoys. In Portugal there is the solidarity supplement that is paid to the elderly
whether or not they are entitled to a contributory pension. France has the allowance of spe-
cific solidarity that guarantees a minimum income for persons capable of working and full
allowance when income is below a certain ceiling. On the other hand United Kingdom has
the income support, an income that is tax financed and provides financial help to persons
who are not fully employed or their income from all sources is below a set minimum level.

On the other side Norway, Sweden and Austria apply social assistance systems that cover
well defined and estimated expenses. These expenses include expenses in daily life such as
food and drink, clothes and shoes, a daily newspaper, telephone expenses and expenses re-
lated to participation in leisure activities and transportation costs. More specifically, the
Swedish system includes household insurance.4

The amount of income support is subject to periodic review and adjustment (indexation).
Most Member states apply an automatic adjustment following the consumer price index. In
some countries an increase will take place only if the consumer index is raised by a certain
percentage (CZ, LU, CH, BE). In other countries adjustments take place at regular intervals
after decision by the government (LT, EE). In others this will depend on the available budg-
etary resources (BG, LV). As for the adjustment periodicity, it varies from country to coun-
try, six months for Slovenia and Hungary, to one year almost in all member states, to two or
three years in Poland and at regular intervals in Lithuania and Estonia.

4
Missoc Analysis 2011, Guaranteed Minimum Income Resources, For the European Commission DG Employment, Social Affairs
Inclusion, May 2011:
http://www.missoc.org/INFORMATIONBASE/OTHEROUTPUTS/ANALYSIS/2011/MissocAnalysis2011_FINAL -_EN.pdf

10
1.2 Criteria For Eligibility

The most common criteria for eligibility are residence, nationality and age.

(a) Residence

Almost all countries demand legal residence in order to provide the GMI. The only ex-
ceptions are Sweden and the United Kingdom. In Sweden, the beneficiaries must have
residence permission while in the UK just their presence in the country. In other coun-
tries, the legal residence should not exceed a specified time limit, for example in Den-
mark seven years, five years in Luxembourg, and 3-5 years in Spain. In some countries, a
reference is made for to the necessity of "Permanent residence", without, however,
specifying the exact time: this is the case of France and many other EU Member States,
such as Estonia, Latvia, Lithuania, Malta, Poland and Slovenia. It is possible that this
condition aims the exclusion of citizens living in other countries of Western Europe for
many months of the year by accessing measures of Guaranteed Minimum income.

(b) Nationality

Concerning citizenship we identify three groups of countries. The first consists of coun-
tries granting G.M.I only for their citizens and therefore nationality is a prerequisite for
access to the measure (with the exception of asylum seekers and other special catego-
ries): These countries are Austria, France, Malta and Denmark. A second category of
countries covers foreigners provided they are permanent residents in their territory.
These are Finland, Luxembourg, Spain, Norway, Bulgaria, Netherlands, Portugal, United
Kingdom, Estonia, Lithuania, Poland, Romania, Slovakia, Slovenia and Sweden. In Ire-
land, foreign nationals are required to have a simple «residence permit», while in Cy-
prus citizenship is not required in order to take guaranteed minimum income.5

(c) Age

The differences between countries in terms of access to such a measure is even more
pronounced with regard to age limits. Countries such as Austria, Denmark, Finland,
Germany, Norway, Sweden, Cyprus, Bulgaria, Estonia, Latvia, Lithuania, the Czech Re-
public and Slovakia pose no age limit for admission to GMI. Often, however, the lack of
an age limit is only "typical" and not essential in the sense that it does not automatically
been translated into a subjective right of the minor. For example in the Nordic countries
(Norway, Denmark, Sweden and Finland), all laws for G.M.I mention as parents obliga-
tion to assist financially their minor children.6 In Cyprus, this rule applies only to chil-
dren with special needs.

In other countries, a minimum age exists for someone to be chosen for the GMI. For the
United Kingdom, age limit is 16 years, 18 years in Belgium, Ireland, Malta, the Nether-
lands, Slovenia, Romania, Poland and Portugal, and 25 years for Luxembourg, France
and Spain. There are of course exceptions involving married minors with children such

5
Giannluca Busilacchi, «The different regimes of minimum income policies in the enlarged Europe», BIEN conference,2008 ,
pp.5
6
Norwegian Children Act of 1981

11
 as, in Belgium and Portugal. Maximum age limit for admission, expressly provided only
in Spain (over 65 years) and Malta (over 60 years). Especially in Germany and the Neth-
erlands people aged over 65 come under specific measures.7

1.3 The link between Guaranteed Minimum Income and the integration to the labour mar-
ket

Most GMI’s European programs ensure the beneficiaries’ social and vocational integration.
Even social protection measures adopted in the postwar period have recently been amend-
ed in this direction. Addressing the poverty risk and social exclusions requires a balanced mix
of policies for work integration with particular attention to those who are not employed or
are being engaged in precarious work.8 The majority of Member States link the right to ben-
efits with a minimum level of commitment for employment. In Luxembourg, for example,
one cannot leave a job without any justifiable reason and cannot be dismissed if there are
other reasonable grounds. Switzerland does not implement such policies because the main
concern is the elderly and the disabled. On the other hand, Slovakia emphasizes on the ben-
eficiaries’ willingness to work. Finally, in Spain reintegration programs are not related to the
G.M.I payment.

Most of the Member states’ legislation prescribes that registering as a job seeker in the pub-
lic employment offices is mandatory. As a rule, every applicant for social assistance benefits
must either actively search for income or at least be available for job offers. All Member
States primarily focus on obtaining an income from an employment contract. In Romania,
for example, one of the family members is obliged to work in the interest of the local au-
thority, aiming social integration. In Netherlands the partners of the unemployed should, if
possible, also look for work. In Germany persons in need who are capable of working as well
as persons living together with them have to resort to all possibilities in order to end or im-
prove their situation of need. Mostly, some categories are exempted from these obligations.

If the search for work seems to result in total failure, most of the Member states provide an
«alternative path», vocational or occupational training. Some Member states establish
terms, after which vocational training should be attended if the job search turns out to be
unsuccessful. For example in Ireland, all persons who are unemployed for three months
must participate in the National Employment Action Plan designed with the view to reenter
the labour market.

Apart from vocational training, some Member states employ other ways of support. For in-
stance in Germany, local authorities can offer debt counseling, psychological support or ad-
diction counseling. In Malta, there are rehabilitation programs for alcohol and drugs, while
in Slovenia the beneficiary must sign a contract with the Social Work Center.

7
European Parliament (2006), Policy Department Economic and Scientific Policy, The role of minimum income for social inclu-
sion in the European Union, pp.35:
http://www.europarl.gr/resource/static/files/projets_pdf/minimum_income_social_inclusion.pdf
8
See: European Commission, Recommendation of the European Commission of 3 October 2008 on the active inclusion of peo-
ple excluded from the labour market (COM(2008) 5737).

12
Some countries take it a step further and involve the public administration and bodies to
ensure activation:

 Norway: The Labour and Welfare Service may set conditions for receiving social
financial assistance. These conditions may include working for the municipality.

 Romania: One of the family members is obliged to work in the interest of the
local authority, aiming at social integration, under certain conditions.

 Bulgaria: Unemployed persons in order to receive the monthly social assistance

allowance, have to participate in programs organized by the municipal admin-
istration to provide social services.

 Belgium: The public center for social assistance (PCSA) may propose a job to the
person concerned and become his or her employer, with the view to acquiring
professional experience or put the person at the disposal of third parties, also
from the private sector. The public center for social assistance can even cover a
part of the wage.9

Almost all of the Member States’ schemes impose sanctions and thus penalize “reluctant
behavior or attitude”. In Bulgaria, refusal to participate in programs organized by the admin-
istration, results in the withdrawal of the financial social assistance. The legislative acts for
imposing sanctions either provide a ‘blank norm’ or sum up the reasons and situations when
sanctions are likely to be imposed. Examples of the first category can be found in Cyprus that
refusals to undertake training or a job offer could lead to public assistance’s withdrawal. The
same happens in Denmark. Hungary could be classified into the second category, that the
entitlement to benefits is automatically terminated if the person is deleted from the registry
of job seekers. If this situation is being noticed for the first time, that means 1 month sus-
pension, if noticed for the second time, it means provision’s termination.10

Some Member States provide financial incentives to employers who hire people receiving
the benefit. Countries like Belgium, France, and Slovakia, subsidize business owners who
employ GMI recipients. Specifically Slovenia grants 12 monthly payments G.M.I to employers
who hire long term GMI beneficiaries.

1.4 Coverage and Non - Take Up

In an approach driven right into a universal safety net of last resort, the provision of mini-
mum resources must not simply be offered, but guaranteed to all people who are in need in
order to ensure the human dignity. The G.M.I systems should ideally cover the entire popu-
lation, regardless of their origin, nationality or legal (or not) of their stay in the country. Nev-
ertheless, in practice, two major factors tend to limit this universal coverage. The first relates
to the systems’ institutional characteristics that limit a person’s right. To be effective, a
measure must also ensure that it will reach those who really need it. This balance is in prac-
tice very difficult to be achieved. Various studies show that the more universal welfare re-
9
www.eapn.ie/standards
10
Missoc Analysis (2011).

13
gimes tend to be, the more effective they become in reducing poverty and inequalities. But
they put higher burden on public expenditure. In recent decades, the intense pressure on all
EU countries for the control and reduction of public spending has caused cuts in social wel-
fare. This has gradually translated into more conditions, while the political administration of
means-tested benefits tends to be established in all EU countries during the past fifteen
years. Welfare schemes have become more individualistic and less universal. It is clear from
the expert’s reports that the eligibility conditions of minimum income schemes vary greatly
across the EU, thereby leading to a significant change in the coverage of people with very
low incomes. In some countries there are still many people with very low incomes who do
not have access to these systems. On the other hand, some countries have schemes which
provide fairly comprehensive coverage of the most population, while in others the coverage
is very limited and partial. The main reason for this difference is the existence of strong re-
gional differences in coverage.11

In general, countries with comprehensive systems such as Austria, Belgium, Denmark, Ger-
many, Finland and Sweden tend to achieve full coverage of all the people in need. For exam-
ple, in Belgium, "the right to social integration is quasi-universal». The Finnish experts com-
ment that "the overall coverage is not considered to be a significant problem in Finland be-
cause all adults are covered by a type of minimum income." In Sweden, welfare recipients
are largely young and immigrants (about fifty percent of the beneficiaries were born outside
of Sweden).The UK experts believe that in comparison with other EU countries, potential
advantage of the UK’s system is that the 'gaps' of poverty is comparatively lower than pov-
erty rates.12

The second factor limiting coverage is the attitude of potential beneficiaries who often do
not claim what they are entitled. This is the issue of non-coverage/non-take up. This is an
important issue that deserves special attention. In Germany, even though the system pro-
vides universal coverage, a 25-40% left out of coverage.

The risk of non-coverage/non-take up is greater for some groups. For example, in Belgium
there is greater risk for women, couples, persons with low education levels and for ages 16-
24. But what are the reasons for non-coverage? One main reason is the systems’ complexity
(Austria, Germany, Greece, Hungary, Ireland, and Finland) which leads people who are not
familiar with the systems to consider that are not eligible.

11
Ramon Pena Casas (2005), Setting minimum social standards across Europe,Working Paper I, EAPN, Ireland. Πρόσβαση στο:
http://www.eapn.ie/pdfs/155_paper%20I%20-%20Issues%20for%20Social%20Standards%20and%20social%20rights.fin.pdf
12
Hugh Frazer and Eric Marlier (2009), Minimum income Schemes across EU members states, Synthesis Report, October. Ac-
cess to: http://www.eesc.europa.eu/resources/docs/minimum-income-schemes-across-eu-member-states_October-
2009_en.pdf

14
2 Guaranteed Minimum Income models in the EU

2.1 THE GERMAN MODEL

The Sozialhilfe is a last resort assistance for people who cannot work due to illness or disabil-
ity, pensioners with the lowest pension, or children who are in need. One of the objectives
was to introduce the concept of activating persons into labor market. This resulted in con-
necting the benefit grant with the contract between the applicant and a labour organization.
The measure lasts as long as the recipient is in need, provided that the beneficiaries should
be ready at any time to work. Age is not a prerequisite and therefore minors may be eligible,
while after 65 years the allowance is being replaced by another social assistance. Social as-
sistance’s purpose for job seekers is to enhance individual accountability for those who need
help and contribute to progress towards their economic independence. The benefit is calcu-
lated based on the household characteristics and specific needs. The standard payment rate
structure includes the following elements:

- Standard rate for the head of household (the applicant)

- Standard rate for other adults in households
- Standard rates for each child (depending on age)
- Increased need allowance for claimants in specific situations
- Cost of rent and heating
- Additional payments.

The amount of the allowance is calculated according to the following scheme:

1) Primary needs: food, clothing, rent, electricity, water, gas (including heating costs),
cost of repairs (e.g. refrigerators, dishwashers, bicycles) and the cost of leisure ac-
tivities
TABLE 3: Amount of Minimum Income
Category Amount
Standard rate for the head of household (the ap- € 345 (West),
plicant) or a person alone € 331 (East)

60% of the standard rate

Standard rate for other adults in households and
€ 207 (West),
for children under 14 years old
€ 199 (East)

80% of the standard rate

After 14 years old
€ 276 (West), € 265 (East)

Source: http://www.sozialhilfe24.de

2) Secondary needs: Besides primary needs other benefits can be added according to
specific needs of particular targets of population.13

13
European Parliament (2006) pp.68

15
 TABLE 4: GMI’S increment
Category Increament
 After the age of 65
 Persons not able to work under 65 years 17% of the rate for primary needs
old
 Pregnant women after 12a week
 Lone parents with children
16% of the rate for basic needs
 One child under 7 years old or
 two or three children under 16
35% of the rate for primary needs
Disabled
Between 20 - 100 euro
subjects that require a costly feeding
Sourc: http://www.sozialhilfe24.de

3) Special needs
4) Housing costs (The benefits provided for housing, heating and other charges relating
to housing are granted in addition to the standard rate on a monthly basis)
5) Medical assistance for long term care in the family

We should mention at this point that the applicant must take advantage of all his /her prop-
erty before applying for social assistance.
TABLE 5: GMI’S main characteristics - Germany
Main Characteristics
Minimum income Sozialhilfe(Social assistance)
Level of government State
responsible for the measure
Territorial variability of Yes
implementation
Financing State
Type of financing Taxation
Conditions Residence
Beneficiary Individual or member of a household unit
Age No
Duration of the benefits Unlimited
Amount - €345 per month
- 100% for the head of the household
- 60% for members of the household aged
under 14
- 80% for members of the household aged
14 and above
- 90% if spouses or cohabitants are living
- together
Willingness to work Yes
Social inclusion programs The assistance includes information and, if neces-
sary, preparation of contacts and the assistance of
an accompanying person to visit the social ser-
vices and occasions of active participation in
community life including social commitment
Associated rights Health,household and heating
Taxation No
Source: Policy Department Economic and Scientific Policy

16
2.2 THE FRENCH MODEL

The French G.M.I system follows the structure of the German and sets as a prerequisite the
linking between income support measures with measures for the beneficiaries’ social inte-
gration. It provides a basic income to every person aged 25 years or younger if he or she is a
parent. Addressed not only to those who are unable to work but also supports the unem-
ployed. In case they have income or other resources under the guaranteed amount, they can
accept an individual rehabilitation program in the labour market. Already since 1988, France
applies successfully G.M.I policies and implementing the following programs:

- Guaranteed minimum income for the elderly

- Handicapped adult allowance
- Single parent allowance
- Integration allowance
- Guaranteed minimum income benefit or minimum integration benefit

The G.M.I targets in supporting the beneficiaries for a new creative start to the economic,
social and working life, rather than perpetuating economic dependence.14 The amount of
the guaranteed minimum income is based on the beneficiary’s resources, his / her spouse or
partner and their dependents. These resources can be of various kinds:

- Daily allowance from Social Security due to illness or working accident

- Unemployment allowance
- Family allowance
- Disability allowance
- Income from movable and immovable property and from interest funds
- Revenue from other activities

The amount received is the difference between the amount of RMI and monthly personal
resources. In the table below, we present the GMI’s maximum amount per household (since
January 2007) which formed in the basis of the housing measures.

TABLE 6: Maximum amount of GMI per household, from January 2007

After reduction for package
Without reduction
(amounts in euro) housing
Single Couples Single Couples
Without children 387.96 555.48 440.86 661.29
One child 555.48 662.61 661.29 793.55
Two children 662.61 794.87 793.55 925.81
Three children 838.95 971.21 969.89 1,102.15
Four children 1,015.29 1,147.55 1,146.23 1,278.49
Five children 1,191.63 1,323.89 1,322.57 1,454.83
Every additional children 176.34 176.34 176.34 176.34
Source: Report by the National Observatory on Poverty and Social Exclusion 2005-2006

14
European Parliament (2006), pp. 28-32.

17
Resources calculation is reviewed periodically (quarterly) to determine the amount.

Except the case of professional activity, as soon as the recipient’s resources exceed the
RMI’s amount, the payment is interrupted on the first day of the following month. With re-
gard to labor market integration, one way is to create business related to social sector in
order to recruit persons belonging to vulnerable groups and are GMI recipients.15
TABLE 7: GMI’S main characteristics - France
Main characteristics
Minimum income Revenue Minimum d’ Insertion (RMI)
Level of government responsible for the measure State
Territorial variability of implementation No
Financing State
Type of financing Taxation
Conditions Residence
Beneficiary Yes, household (dependants under 25 years)
Age From 25, but also under 25 who have to support child
Duration of the benefits Three months, possibility to be extended for periods
of between three months and one year
Amount €440.86 per month
100% Single person
+50%Couple without children
+30% Couple with one child
+30% Couple with two children
+40% Couple with three children
Willingness to work Yes
Social inclusion programs Yes, integration contract
Associated rights Social housing allowance
Taxation No
Source: Policy Department Economic and Scientific Policy

2.3 THE ITALIAN MODEL

Italy belongs to the South European welfare model, and is characterized by weak social poli-
cy regarding poverty, social exclusion and minimum income programs, giving significant
weight to family’s role.

The minimum income was introduced in Italy at national level in 1999 and piloted the period
from 1999 to 2004, in 39 municipalities initially and then expanded into 305 municipalities,
mainly in southern Italy. In 2004, the government designed a new system of minimum in-
come support, called «Reddito di ultimaistanza», but in the end the government did not
fund it. In 2001, after Constitution’s revision, regions undertook social policy’s implementa-
tion, leaving in the National Assembly only the definition of 'national minimum standards of
social assistance’s quality and availability’. After this amendment, some of the regions, espe-
cially in southern Italy, adopted various measures inspired by the GMI’s national experiment
but ultimately it never materialized.

Potential beneficiaries were families with incomes below a certain threshold configured by
an equivalence scale that took into account the household’s composition and paying special

15
M. Matsaganis, social solidarity and contradictions, The role of minimum income in a modern social policy, Publication Kriti-
ki, 2004 pp.120

18
attention to people with disabilities and children. The economic poverty was the sole criteri-
on for admission to the measure without calling as a prerequisite the beneficiaries activa-
tion. The 72% of beneficiaries were unemployed, 20.3% employees and 7.3% pensioners.
The GMI’s programs management was devolved to local social services.16

Participation in social and vocational integration programs was mandatory, but in fact in
many municipalities the difficulties that encountered during the formulation and implemen-
tation of programs made it formal.

The amount of subsidy per beneficiary is calculated based on the difference in threshold that
is configured based on the equivalence scale and family’s monthly income. During the period
2000-2003, 44,765 families were benefited (i.e. 60% of all applications). The number of ben-
eficiaries estimated at 1.7% of Italian families that was below the specified poverty line.

During the pilot phase, 28,000 people took part in social inclusion programs: this happened
mainly in the North Italy, in contrast to the South where local authorities were not properly
prepared for such programs. 43% of programs related to social activities, 21% to family care
and support and a 10% to basic education and vocational training.17
TABLE 8: GMI’S main characteristics - Italy
Main characteristics
Minimum income Minimum income (Reddito di base o reddito di
cittadinanza)
Level of government responsible for the measure Municipality
Territorial variability of implementation Yes
Financing Municipality
Type of financing Taxation
Conditions Non contributory; residence in the region
Beneficiary Family
Age Adult and old age
Duration of the benefits Temporary
Amount The amounts vary from region to region and are
differentiated according to the number of family
members
Willingness to work Depends on regions
Social inclusion programs Depends on regions
Associated rights Depends on regions
Taxation No
Source: Policy Department Economic and Scientific Policy

2.4 THE PORTUGUESE MODEL

In Portugal, the GMI program was established by law in 1996 as an effort to strengthen so-
cial cohesion, while in 2003 the program was modified. The minimum income is recognized
as an individual right,18regardless of whether contributions are paid to the social insurance.
The Portugal G.M.I is defined as a cash benefit for securing an adequate standard of living
according to a social and vocational integration program. The reference income is calculated

16
Policy Department Economic and Scientific Policy, The Role of Minimum Income for Social Inclusion in the EU,2007, pp. 84
17
European Parliament (2006), pp. 85.
18
INE/GSEE (2010), 'The Basic Guaranteed Income Policy and the Guaranteed Minimum Income in EU-15 ", Studies / 9, Decem-
ber, p.40.

19
based on the assets of the household members, and should be less than the amount speci-
fied as guaranteed. The duration of the benefit is 12 months. The guaranteed amount is
based on the basic non-contributory pension. The Portuguese GMI is combined with other
benefits. Right for G.M.I application have all those residing in the country.

The individualization of additional services beyond income support is applicable at a local

level from the appropriate department. Moreover beneficiaries are obliged to seeking for
employment through special offices and attend training sessions for skills and work experi-
ence.

The measure of GMI in Portugal reduced the poverty intensity but not the poverty index. 19
The total number of GMI beneficiaries is less than 5% of the Portuguese population, while
the percentage of poor in the last decade is around 20% of the total population.
TABLE 9: GMI’S main characteristics – Portugal
Main characteristics
Minimum income Social insertion income (Rendimento social de
inserção)
Level of government responsible for the measure State
Territorial variability of implementation No
Financing State
Type of financing Taxation
Conditions Residence
Beneficiary Household
Age From 18, but also under 18 who have to support
child or is married or living in cohabitation
Duration of the benefits 12 months, extended if fulfillment of the legal con-
ditions is proved
Associated rights No
Amount Single person: up to euro 177.05 per month
Single person: 100%
2nd adult in household: + 100%
From 3rd adult on: + 70%
1st and 2nd child: + 50%
3rd child and following: + 60%
Willingness to work Yes
Social inclusion programs Yes, social integration programme
Taxation No
Source: Policy Department Economic and Scientific Policy

2.5 CONCLUSIONS FROM THE EU EXPERIENCE

The main elements from the European experience are the following:

 Minimum income schemes continue to differ enormously from one Member state to
another in terms of generosity and adequacy level.

 Greece is the only Member State that has not implemented yet G.M.I.

19
See: Rodrigues, C. Farinha (2004), “The redistributive impact of the Guaranteed Minimum Income in Portugal” , Instituto
Superior de Economia e Gestão - DE Working papers 9: http://pascal.iseg.utl.pt/~depeco/wp/wp092004.pdf
Also see: Pereirinha, J.(2006) “Poverty and Antipoverty policies in Portugal: the experience of the guaranteed minimum in-
come”, in Petmesidou, M. and Papatheodorou, C., Poverty and social deprivation in the Mediterranean: Trends, Policies and
Wealfare prospects in the Millennium, London/New York

20
 There are no common criteria for establishing a "level of competence" and there is
no consensus as to the level of the minimum income needed to escape someone
from poverty and social exclusion.

 The condition for the GMI provision is being reinforced and availability for work is
considered a key requisite. This has adverse impacts on vulnerable groups such as
single parent families.

 EU Member States apply strict sanctions for those who reject a proposed job.

 The low absorption rate of the measure remains alarming (Coverage and take –up).

 In some Member States the minimum income is associated with a comprehensive

safety net that consists of different programs in order to promote rehabilitation and
self-sufficiency.

 Many countries have adopted specific measures to address the crisis, both to com-
bat unemployment (such as aid and incentives for business, or financial support
measures for the unemployed) and the strengthening of social assistance. To protect
individuals’ and their family’s income, some Member States have modified the eligi-
bility criteria and aid’s duration.

 Large numbers of unemployed benefit primarily only from the minimum income.

 There is difficulty in leaving the benefit.

21
3 The Greek case

3.1 Unemployment and poverty

According to the Hellenic Statistical Authority, during the second quarter of 2014 the unem-
ployment rate was 26.6%, versus 27.8% in the previous quarter and 27.3% in the corre-
sponding quarter of 2013.Τhe number of unemployed amounted to 1,280,101 while affect-
ing more the households heads, e.g. working men in the productive age. Unemployment
among young people aged 15-24 reached 52%, while many households are without any oth-
er employee and without resources. At the same time there was a dramatic decrease in
earnings, while the minimum wage is below the level of 2000.

Poverty can be measured by using three indicators. The first index refers to relative poverty
which measures the percentage of population with income below 60% of median equivalent
disposable income. When the median income increases or decreases then the poverty line
increases or decreases respectively. Specifically, in 2013 the poverty line was 432 euro a
month for one person and 908 euro for a family of four. The second index refers to the fixed
threshold of relative poverty, i.e. the proportion of the population in 2013 had an income
below 60% of median equivalent income 2009. The fixed poverty line for 2013 was 665 euro
for one person and 1,397 euro for a family of four. Finally, the third indicator refers to the
extreme poverty which can be determined by the cost of the basic basket of goods for a
minimum level of decent living. Such a basket for Attica (for 2013), for a household without
expenses of housing loan and rent is 233 euro for one person and 684 euro for a family of
four.20

Based on the survey of income and living conditions of households 2.5 million people are
below the threshold of relative poverty (23.1%), based on the median household income
(60%). In addition, 3.8 million people are at poverty risk due to material deprivation and un-
employment. Greece according to Eurostat is in the worst position in the EU-28 regarding
the poverty risk. Greece is also among the group of countries with the highest poverty
(23.1%) and ahead of Spain, Romania and Bulgaria while has the fourth worst position on
the poverty gap index after Spain, Romania and Bulgaria. Still, according to data from ELSTAT
four in ten cannot pay their loan, one in three has no satisfactory heating and five out of ten
face emergencies.21

Also, according to OECD,22 Greece ranks the fourth worst position among 35 countries
based on indicators of prosperity and quality of life. Another important dimension of poverty
is the child poverty (26.5%, 28.8% in 2012), single parent households, multimember house-
holds, inactive, and people with low educational level.23

20
M. Matsanganis (2014), "Poverty and Public Policy in Greek Crisis", ch. 4 pp.49-51 in Fiscal consolidation: how fair is the dis-
tribution of the burden Parliamentary budget office, Athens, 2014
21
http://www.thetoc.gr/oikonomia/article/elstat-se-kinduno-ftwxeias-25-ekatommuria-ellines
22
OECD(2011), The Causes of Growing Inequality in OECD countries, OECD Publishing
23
Th. Mitrakos (2014), "Fiscal consolidation: The current experience of the financial crisis," chap. 5, p. 59-66, in Fiscal consolida-
tion: how fair is the distribution of the burden Parliamentary budget office, Athens, 2014

22
3.2 Measures against poverty

Greek social policy is based on allowances to specific social groups regardless of income lev-
el. This has resulted in the over-protection of some social groups and others who may be in
greater need, to be outside of the social safety net. The maintenance of these policies during
crisis leads to further exacerbation of social and economic inequalities. Social policy’s re-
form is imperative and must be improved both in terms of efficacy (i.e. Percentage which
improves the level of relative poverty) and in terms of efficiency (i.e. Reducing extreme pov-
erty with less money). As mentioned by the OECD report (2013), there is an unbalanced dis-
tribution of social protection across the entire spectrum of formal risk.

The main measures to alleviate poverty in Greece consist of allowances, which are targeted
at low-income households. The most important of these benefits is the regular unemploy-
ment benefit granted under very strict conditions so that a very small percentage of unem-
ployed can benefit from it. More specifically, during the first quarter of 2013, 233,000 un-
employed received the unemployment benefit when the total number amounted to
1,355,000 persons, i.e. only 17% of the total. The second quarter of 2013, the proportion of
beneficiaries fell further to 12%.

In 2001 the government established the benefit of long-term unemployment as a supple-

ment to regular unemployment benefit (200 per month with a total duration of 12 months).
The scheme was characterized by strict eligibility criteria, such as the beneficiary annual in-
come should be under 12,000 euro, at least 45 years of age and the beneficiary to have re-
ceived a regular unemployment benefit for 12 months. The law 4093/2012 broadened the
eligibility criteria for granting long-term unemployment benefit, by reducing the minimum
age from 45 to 20 years (from 2014), while the maximum annual income was reduced by
12,000 euro to 10,000 euro (plus 586 euro for each child).24

Also, Greece has a high pension spending25 while displaying an enlarged elderly poverty.26
For the uninsured elderly a pension granted by the OGA is provided and financed from the
budget providing a low minimum guaranteed income. Still, the disability benefits were some
of the measures to tackle poverty but the warped system didn’t help and as result benefits
ended up to non beneficiaries.27

In general, the social system has historically failed to fulfill its aims and where there was an
attempt for improvement via tax concessions it failed even more.

3.3 THE REFORM OF SOCIAL BENEFITS

The main feature of social benefits granting in Greece is the fragmentation in various cate-
gories which protects certain social groups and leaves out others (selectivity of social protec-
tion). In addition, there are delays in granting certain welfare benefits (e.g. family allowanc-

24
M. Matsaganis, social solidarity and contradictions, The role of minimum income in a modern social policy, Publication Kriti-
ki, 2004 pp.60
25
13% of GDP
26
35% of people over 65 years
27
In 1989 by Ministerial Decision abolished the income checks in order to grant disability benefits

23
es).28 Also, the practice of lump payments, such as social welfare benefits, because of strict
eligibility criteria did little to alleviate poverty and instead exacerbate the "gaps" in the social
safety net.

Entities that undertake the granting of benefits often do not have the qualifications to do
that. For instance the benefits granting by OGA to families with many children, the employee
family allowances from OAED and finally the subsidy of low employee contributions from
IKA.29

OECD30 recommends the extension of unemployment benefits to 24 months and their grant-
ing regardless of unemployed age. The International Monetary Fund proposes the abolition
of number of allowances and their replacement by the G.M.I. At this time, the implementa-
tion of GMI becomes necessary. The G.M.I will serve as the ultimate social safety net for in-
dividuals and households at risk of extreme poverty and who are not receiving social assis-
tance.

3.4 The pilot implementation of Guaranteed Minimum Income in Greece

The guaranteed minimum income was established by the Law 4093/2012 in order to ensure
a decent minimum standard of living. The pilot implementation of the G.M.I is scheduled to
be implemented in 13 municipalities entitled "Guaranteed Social Income."31 The cost of the
pilot implementation for the period 2013-2014 amounts to €20 million. The amount of the
GMI starting from 200 euros for a single person and increases depending on the recipient’s
marital status. For married couples it adds 100 euros for each adult member of the family
beyond the spouse and 50 euros for each child. So a couple with two children without any
source of income will receive the entire amount, i.e. 400 euro (Tables 11,12). Inclusion crite-
ria are residence, income and assets. We should note that the Deputy Minister of Labour Mr.
Kegkeroglou noted that the Social Guaranteed Income will also include guests.32 The launch
program was originally scheduled for September 2014, and according to the Minister of La-
bour, applications will be submitted electronically officially on November 15.

An important innovation is that admission to the program shall be based on real income33 in
real time. The recipient unit must have real income below the income threshold depending
on the number of members and their age. Imputed income and objective costs are not taken
into account when calculating GMI amount. Also, 20% of personal services are excluded, as
well as training allowances, income from rationing services and amounts of social solidarity
levy or insurance. In addition, G.M.I covers the uninsured elderly as happens in Portugal.
Additionally, if in a family the husband gets €360 unemployment benefit, the family is auto-
matically excluded from the right to a guaranteed minimum income.34 If one takes 200 euros

28
According to the Deputy of State labor, will be paid the third installment of family allowance, and will be paid the two previ-
ous installments for those who haven’t taken them
29
M. Matsaganis, social solidarity and contradictions, The role of minimum income in a modern social policy, Publication Kriti-
ki, 2004 pp.60
30
OECD (2013) Greece: Reform of social welfare programs. Inspections Public Governance from OECD.Paris
31
Article 5 of the Ministerial Decision
32
Speech of Deputy Labour Mr. Kegkeroglou, in the presentation for the pilot implementation.
33
Real income arises after deduction of taxes and contributions to pension
34
See: Journal "Free Press" 08/24/2014

24
long-term unemployment allowance he is entitled the difference, i.e. 150 euros. Single-
parent families with a child or an adult entitled the amount of 300 euros. These amounts
are, untaxed, non-confiscated and not subjected to any reservation."

As for the assets, the system takes into account the real and movable property as well as
deposits, e.g. for a single person, the total tax value of the property must not exceed
€90,000 and increased by € 15,000 for each subsequent adult member and € 10,000 for each
child, but will not exceed 200,000 euros. If a family has an income, this income is subtracted
and is given the difference. For example, if a couple with two children are entitled € 4.800,
but has income € 2.000, then the amount will be set at € 2.800, and will take € 233 a month.

For foreign families, legal residence for five years is required.

The measure of G.SI is associated with heating allowance, social groceries program, unin-
sured passbook and subsidized employment and training programs,35 and social residential
tariff DEH-EYDAP-DEYA. Moreover it provides referral and inclusion in social structures and
services. Applications will be submitted electronically and payments will be made through
the beneficiary’s bank account.36 The benefit stops if the recipient leaves Greece over two
months (unless there are reasons of hospitalization) or refuses to work in a position that the
Employment Agency suggests. The Office of Electronic Government and Social Security bear
part of the management effort. Other organizations that will support the program is the unit
program, the National Institute of Labour and Human Resources, the General Secretariat of
Revenue, the National Centre for Public Administration, the General Secretariat for Infor-
mation Systems, the Employment Service and of course each municipality.37 Main aim after
the pilot implementation is an extension in order to cover 7% of the population in need and
is expected to cost 850 million to 1 billion euro.
TABLE 10: The 13 municipalities of the pilot implementation

Region of Attica Kalithea

Region of Peloponnese Tripoli
Region of Sterea Ellada Chalkida
Region of Western Macedonia Grevena
Region of Epirus Ioannina
Region of Thessalia Karditsa
Region of Ionian Islands Lefkada
Region of Crete Malevizi
Region of South Aegean Syros
Region of Norh Aegean Samos
Region of western Greece Holy City Mesolongiou
Region of Central Macedonia Edessa
Region of Macedonia and Thrace Drama
Source: Suggestion of Labour Minister I.Vroutsis

35
Article 1 of the Ministerial Decision
36
Article 3 of the Ministerial Decision
37
The Municipality utilizes the assistance program at home, welfare units and each program locally.

25
 TABLE 11: Configuring Guaranteed Minimum Income under marital status and property
Monthly
Annual declared income (€) Marital status Criteria of real estate (€)
allowance
0 Single individual Up to 25,000 200
1,500 Single Up to 90,000 75
3,000 Married Up to 105,000 50
4,500 With 1 minor child Up to 115,000 0
0 With 2 minor children Up to 125,000 400
4,000 With 2 minor children Up to 125,000 67
5,000 With 3 children (1minor) Up to 145,000 133
5,500 With 2 Children (1 parent) Up to 120,000 0
5,000 With 4 children (2 minor) Up to 155,000 83
7,000 With 5 children (2 minor) Up to 170,000 116
Source:Newspaper"Free Press"

TABLE 12: The GMI based on marital status (income threshold)

Marital status Monthly(€) Annual (€)
Single without children 200 € 2.400 €
Couple without children 300 € 3.600 €
Couple with 1 minor child 350 € 4.200 €
Couple with 2 minor children 400 € 4.800 €
Couple with 3 minor children 450 € 5.400 €
Couple with 4 minor children 500 € 6.000 €
Couple with 1 adult child 400 € 4.800 €
Couple with 1 minor and 1 adult child 450 € 5.400 €
Couple with 2 adult children 500 € 6.000 €
Couple with 2 minor and 1 adult child 500 € 6.000 €
Single-parent family with one minor child 250 € 3.000 €
Single-parent family with two minor children 350 € 4.200 €
Single-parent family with one adult child 300 € 3.600 €
Single-parent family with two adult children 400 € 4.800 €
Source:Suggestion of Labour Minister I.Vroutsis

3.4.1 The financial ensuring of the Guaranteed Minimum Income System after the pilot
implementation

The future financing of G.M.I programs is a major issue given the budgetary constraints aris-
ing from the deep recession. The elimination of inefficient benefits, replacing traditional
subsidy programs through training, lifelong learning and employment integration of the un-
employed may contribute significantly to the savings and therefore the implementation of
the GMI.

At the same time Structural Funds’ resources (2014-2020) could be exploited in accordance
with the aims set out in the EU Strategy for 2020. Resources could be also found from
World Bank. The municipalities can also contribute greatly. For instance in France 20% of
GMI is funded by the region, while in Germany the municipalities finance a 75%. Other fund-
ing resources are the resources of Special Solidarity Fund (L.3522/2007), the European fund
assistance and the European Social training Centre. In addition, funding sources can be de-
rived from the Special solidarity levy for unemployed, as well as from activities of Greek and
multinational companies wishing to provide their resources for vacancies for specific catego-
ries of unemployed. In the same direction it may be the creation of enterprises in the social
economy from subsidized unemployed and the use of non - governmental organizations and

26
finally using voluntary organizations for counseling and support. However, the main funding
source must be the State Budget.

3.4.2 From the debate to the implementation, key matters arising.

During the implementation of GMI, several issues should be taken into account:

- Ensure resources from EU programs

- Rescheduling of social spending38
- Determination of actual income so as not to exclude the real beneficial
- Cooperation between the competent bodies that will materialize the program ( mu-
nicipalities social service, OAED, OGA, KEP)
- Cooperation between the parties and the government in order to promote the
measure
- Training of public administration employees
- Reduction of bureaucratic process
- Proper and complete information for the measure, so that the persons can submit
applications

Another important issue that must be taken into account during the implementation is the
poverty trap and unemployment trap. The unemployment trap means that the employee
does not wish to search for work, because his wage will increase the reference income and
he will be excluded from the GMI. As a result he will drive himself into poverty trap. The
G.M.I’s amount should be formed on the basis of minimum wages, living standards, house-
hold composition and the real purchasing power.39 The allowance amount should be such
that it does not act as a disincentive for work while it should be connected to the beneficiar-
ies’ obligation to be available for work at any time. The question which arises, is whether
the commitment undertaken, makes them prone to poorly paid jobs and worsening of social
status. Also, here arises the issue of the social stigma, which should be treated with discre-
tion. Many people that are entitled to the allowance will not apply. In a nutshell, the state
should ensure the allowance to recipients without requiring them to numerous bureaucratic
procedures (impersonal assessment applications). The assistance allowance other than in-
come support may include:

- Providing housing for homeless

- Creating social care clinics for the uninsured
- Providing coupons for purchases of goods and services that meet basic needs of
households and individuals (and here again there is the issue of social stigma)
- Linking income support with voluntary social work or lifelong education. The reinte-
gration of beneficiaries into employment means reducing the financial cost of the
program

38
Mpalfousias Ath., K.Kotsis, Guaranteed Minimum Income in EU-15 and possibilities of application in Greece, KEPE ,Athens
2007
39
Stergiou, A. (2009), Basic Income: Should we take seriously a utopia? Journal Macedonia, 01.02.2009

27