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Friday, June 20, 2014

The Destruction of Greek Public Insurance using the pretext of the Crisis!

Press Release

The Destruction of Greek Public Insurance using the pretext of the Crisis!

The 2014 report of the ILO (International Labor Organization of the UN) on World Social Protection makes interesting reading.  You can read it here – http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_245201.pdf

It is glaringly obvious that in a period of economic crisis, such as the one we’re living through, human rights are not in the forefront of policy anywhere.  According to the ILO report, social welfare and pubic insurance policies, which play a very important role in the realization of human rights regarding health, education, reduction of poverty and social equality are waning, rather than becoming stronger.

Unemployment is recognized by the Universal Declaration of Human Rights as an important area that should be covered by public welfare systems (article 25).  Data from the European Union shows that that the unemployed who receive unemployment benefits are more likely to return to work than those who do not (European Commission 2014, p. 163).  But even so, the right to public insurance for the unemployed is shrinking at the precise period when it is most needed.  In 2010-2011, the percentage of GDP to public expenditure on social protection programs for working age people in Greece (excluding health) reached only 2% (less than the percentage in Albania and Bulgaria), while in countries such as Belgium, Ireland and even Spain (also badly hit by the crisis) the level is more than 6%, and more than 8% in Scandinavian countries.  

As a direct consequence, between 2007 and 2012, child poverty increased in 19 of the 28 member states of the European Union while more than a quarter of the children in Greece, Italy, Bulgaria and Romania and Spain live below the poverty level (€7,178 per year for and individual, and €15,073 euros for a family of four).  The increase in child poverty is cause for alarm not only for the negative, long term impact in relation to the future employment prospects of the today’s children, but also for the future productivity of European economies (European Commission 2014A)

Concerning public pensions, Greece is one of the few countries in the world (the only other European countries being Spain and Albania) where there has been an overall reduction of pension levels (which started in 2010-2012.  Nobel prizewinning economist Joseph Stiglitz sounded the alarm, but in vain.  “When the economy gets weaker, spending on social protection and unemployment schemes should automatically go up, helping to stabilize the economy. ……One of the sad facts of the so-called reforms in recent decades is that we have been weakening these important automatic stabilizers.” (International Labour Review, Vol. 148 (2009), No. 1–2).

In Greece, the budgetary consolidation measures have featured significant budget cuts, even in health.  The per capita expenditure on health in Greece fell 11.1% between 2009 and 2011 (OECD 2013c) while the health budget for 2011 decreased by €1.4 billion.  These cuts have led to reduced health care delivery and problems in a wide range of areas from preventative care to the availability and affordability of health services and essential medicines such as antibiotics.  Creation and maintenance of health infrastructure has also been adversely affected.

Shifting the burden for health care payment from the puclic purse to individual pockets has particularly serious consequences for low income groups.  At the exact same time, fiscal consolidation measures have resulted in the reduction of workers in the health field and a reduction of their salaries.  The increase demand for public health services was self-evident.

It is clear that the recovery effort of the financial sector has been at the expense of social protection programs, as if this was the cause of the crisis.  However, deficits continue to grow, the bank bailouts go on and revenues continue to decline because of the economic downturn.   Oliver Blanchard, the Chief Economist at the IMF has admitted that there were serious errors in the design of the fiscal consolidation policies (Blanchard and Leigh 2013).  The increase of unemployment and poverty on this scale in so many European countries should have led to measures that increased and improved spending for social protection programs, not wholesale cutbacks.

For example, in Greece, salaries have been cut by nearly 35% and unemployment reached 28% from 2008 to 2013.  And yet, expenses for social protection programs were reduced by more than 12% in the same period.  Inevitably, poverty in Greece climbed to a record level exceeding 35% of the population in 2013 with all the attendant misery connected with families who cannot meet their basic needs.

Recently the European Parliament launched an inquiry into the legitimacy of these “reforms” as concerns Ireland, Cyprus, Spain, Slovenia, Portugal Italy and Greece (European Parliament 2014b).  You can read their conclusions here (http://mkie-foreign.blogspot.gr/2014/03/a-resolution-by-european-parliament.html)


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