Greece still has a long way to go until its social protection system evolves into an integrated apparatus for Greek citizens, a report by the Organization for Economic Cooperation and Security (OECD) reveals. It shows that out of every 100 euros the state spends, about €62.70 goes to pensioners and just €15.30 is spent on handouts for the active population.
Social expenditure in Greece may be close to the OECD member-states’ average level – i.e. 24% of gross domestic product, against the OECD’s mean rate of 19.9%, according to 2019 data – but Greece and Italy have the highest rate of spending on pensions, at 15.5% and 15.6% respectively, with this country registering another negative record by also having the lowest rate of social expenditure outside of healthcare, at 0.4% of GDP.
In practice, even after the drastic cuts during the bailout period and the fiscal limitations, Greece has kept its pension spending high, thereby reducing the capacity of citizens – and mainly vulnerable groups in the active population – to have access to social support and handouts.
The problem is expected to grow with the aging of the population, as it is taken as a given that the demographic problem will exert further pressure for increased social spending, mainly on healthcare and pensioners.
In the medium term, the OECD notes in its report, the coronavirus is expected to lead not only Greece but all its member-states to a considerable hike in social expenditure, as the requirements for healthcare systems have obviously grown and a broad spectrum of social support has been introduced or expanded to help people meet the challenges of the pandemic.
The report’s analysts say that the high public spending on pensions is mostly due to the low real age of retirement, the relatively high level of pensions and the respectively low spending on private pension programs. Social spending on the active population amounts to just 3.8% of GDP in Greece.