ECONOMY

Gov’t focuses on more efficient spending in anti-poverty scheme

The government yesterday announced a plan to reduce the number of citizens living below the poverty line by 25 percent within five years. Economy and Finance Minister Giorgos Alogoskoufis said the National Social Cohesion Fund (ETAKS) will be funded to the tune of -2 billion annually, with a view to gradually reducing the number of poor from an estimated 2 million to 1.5 million. ETAKS, together with the planned minimum national pension, will form the backbone of the ruling New Democracy party’s social program for the next four years, which aims to increase the effectiveness of social spending, he said. «ETAKS will be funded on the basis of specific objective criteria, that is, integrated programs that will provide targeted income support to those of our fellow citizens in real need,» Alogoskoufis told a news briefing. According to incomes declared in 2005, the poverty line for a single individual was estimated at -6,100 annually, or -12,810 for a couple and two dependent children under the age of 13. Alogoskoufis explained that for the purpose of approving support payments, ETAKS will take into account not only declared incomes but also social criteria such as family status, employment and age. He said that the first programs, already being drafted by the Labor ministry, relate to single-parent families and the long-term and young unemployed. Initially, ETAKS will be funded with -500 million in 2008, rising to -2 billion in 2010. «This means it will be possible to pay about -1,000 to each eligible person on average per year,» Alogoskoufis said. He said that the cost of ETAKS will increase total social spending, presently estimated at 26 percent of gross domestic product (GDP), but he did not rule out the possibility that some of the programs to be funded will replace existing ones, particularly those involving benefits in kind, which are considered ineffective. «The main reason for the ineffectiveness of social spending is that benefits do not target those that really need them. Moreover, a large part of social spending in Greece is not made in payment but in kind, which covers all citizens,» Alogoskoufis said. According to Eurostat figures, although Greek social spending as a percentage of GDP is very near average EU levels, its impact on reducing poverty is far less than in the rest of the Union. Specifically, the poor in Greece have been reduced from 24 to 20 percent of the population, compared to a decrease of 27 to 18 percent in the rest of the EU. Commenting on the anti-poverty plan, Alogoskoufis’s predecessor, PASOK’s Nikos Christodoulakis, charged the government with deception. «What is happening is quite unprecedented. In the last three days, the government has been trying to deceive the people that it intends to reverse three years of austerity, new taxes, rising cost of living and falling incomes,» he said.