ECONOMY

Greece’s poor welfare results

The simultaneous attainment of the goals of economic growth and social cohesion has long been espoused by economic theories. Even opposing schools of economic thought view them as compatible in the framework of suitable economic policies – which may differ widely, usually depending on one’s ideological viewpoint. However, social spending can only be considered effective if it reduces poverty and inequality. Measuring the size of the welfare state in terms of spending alone (much of which is wasted) is rather meaningless. The real indicator is how much it reduces poverty. Growth, increasing the percentage of the economically active population and bringing down the number of jobless people are the most effective tools for reducing poverty and making society more egalitarian. In both absolute and relative terms, Greece spends less than its European Union partners on social services. This spending is well below the EU average as a percentage of gross domestic product. But also the efficiency of social spending in Greece is very low, in fact it is almost nil. The percentage of the population living below the poverty line (defined as those earning less than 60 percent of a country’s average income) in Greece is 23 percent before the provision of social benefits and 22 percent after the provision. The respective rates in Ireland are 33 percent and 17 percent, and in Finland 27 percent and 8 percent. It would seem appropriate to conclude, therefore, that social spending in Greece serves purposes other than that of reducing poverty. Attention must also be drawn to the fact that because the demarcation of the poverty line is relative, those classified as poor in northern countries but enjoying considerable social benefits end up with a larger income than many Greeks living above the poverty line. Social policy must be seen as an investment in the creation of human and social capital, in societies upholding the values of cohesion, solidarity and social justice and in fighting exclusion. For such a strategic goal to be achieved, we must be able to measure and evaluate the effects of policies against poverty. The quality of social services must be commensurate with the level of spending. Unfortunately, in Greece this is not so. Measurable targets are needed with respect to poverty, unemployment, social exclusion, health and welfare – otherwise the level of spending means little. The State then simply wastes resources that could have been used much more effectively. Today, the central issue remains how best to combine economic growth with social justice and cohesion but any social policy will remain untested without the appropriate tools. (1) Georgios Mergos is a professor of economics at the University of Athens.