Is social protection in Greece at a crossroads?

Much of the debate on South European (SE) welfare states over the last decade focused on their imbalances and, particularly, on their pension bias crowding out resources for support to families at earlier stages of the life cycle, undeveloped social safety nets, high labour market segmentation, and great inequalities in social insurance coverage. The need for remodelling institutional arrangements and the financial mix for social protection in these countries was repeatedly stressed in the academic debate primarily with an emphasis on scaling down ‘peaks of generosity’ and balancing protection across a wide range of labour market ‘insider’ and ‘outsider’ groups (see, among others, the contributions to the volume edited by Ferrera 2005; and Petmesidou 2006a). The present crisis puts into starker relief the predicaments of SE social protection systems and, undoubtedly, constitutes a watershed moment for social welfare.

The first part of the paper critically discusses the deadlocks and crisis effects of a social welfare model (for a long-time prevailing in Greece) that combined rent-seeking statist practices with a ‘male breadwinner/familialist regime’. The second part brings into focus the reform dynamics under the current conjuncture of a severe economic and financial crisis expected to have protracted knock-on effects on the Greek society and economy. Central to our analysis are the strains exerted by the sovereign debt crunch on major social policy areas such as pensions, health and social care.

The article concludes with a view of where structural adjustment is heading to. The vital question at issue is whether the current reform wave can effectively address social needs and promote ‘inclusive solidarity’. Or, alternatively a bleak scenario of deepening social polarisation, heightened insecurity among large sections of the population and increasing dependency on a seriously debilitated welfare state will prevail.

Greece is facing the worst economic crisis since World War II. The sovereign debt crunch that emerged in 2009 (excessively high public deficit and debt levels disclosed after the revision of the budget gap) undermined the credibility of the country and led to escalating borrowing costs, bringing the economy near bankruptcy.²

In March 2010, a bailout loan package was agreed between Greece and the EU-ECB-IMF (the so-called ‘troika’) with the aim to cover the country's borrowing requirements for the next three years. Strict austerity measures were attached to it, in parallel with structural changes in the economy and public administration. However, in the two years following the ‘rescue deal’, the economy remained stuck into deep recession (GDP contracted by about 22% from 2008 to 2012 and is estimated to further plunge by nearly 5% in 2013), unemployment soared (reaching 26.8% in May 2013, the highest rate in the EU³ ), while social unrest escalated. The alarmingly deepening crisis brought into relief that many of the assumptions embraced into the initial bailout plan for Greece's debt sustainability were problematic. A revision of the rescue programme in July 2011 (encompassing a 21% write-down on the face value of the bonds held by private bondholders) was soon considered by the international lenders not sufficient for stabilising the debt dynamics. A third iteration of the plan was agreed in late October 2011 for a fresh loan of 130bn Euros, in parallel with a 50% debt restructuring for private bondholders, with strict conditionalities exacting swingeing budgetary cuts, labour market deregulation, drastic public employment reduction and other structural reforms. Strikingly, a few months after the ‘haircut’ operation, and as soon as a shaky government coalition was formed, after two successive national elections (in May and June 2012), forecasts of a ballooning, unsustainable debt triggered a new round of programme revision. Deeper cuts to pensions, salaries and other expenses and further deregulation accompanied the fourth bailout iteration (of late November 2012) amidst persistent uncertainty though as to the viability of the plan.

Rising social spending prior to the crisis is considered among the factors contributing to it, as though the welfare state in Greece had grown to its limits (Matsaganis 2011). Indeed social spending rapidly increased over the last three decades, and surely profligate borrowing by successive governments (combined with EU funding flowing into the country) significantly boosted expenses. However some cautionary remarks need to be made. Greece started from a comparatively low-spending level in the early 1980s (around 12% of GDP) and before the outbreak of the crisis still lagged behind the EU-15 social spending average (24.7% in 2007, compared to 26.7% in the EU-15). Notably, even though per capita GDP in Greece converged to the EU-15 average, reaching about 90% in 2008, per capita social expenditure hardly surpassed 80% of the respective EU-15 rate. Also, employment in public social services has persistently been comparatively low (11% in 2008, compared to 15% in the EU-15⁴ ). These findings run counter to the ‘growth to the limits’ argument and rather indicate that the country under-spent in social protection in terms of its wealth. Closely linked to this is the very low level of state revenues in Greece (37% of GDP in 2008, compared to EU-15 average of 44%) and the highly regressive fiscal policy pursued, given extensive reliance on indirect taxes and the persistently huge tax evasion particularly from the well-off groups.⁵ These conditions put limits to welfare state funding and hardly favoured a politics of solidarity on collective welfare that could secure the support of a wide range of social strata (principally in the middle and upper middle ranks) for redistribution. Instead a configuration of rent-seeking statist-clientelistic structures and practices dominated socio-political integration for a long-time, making access by households, individuals and businesses to ‘political credentials’ a central means for the appropriation of resources and fostering a perception of social problems in individualist/familist terms. This is closely linked with a welfare pattern in which the family has traditionally played a crucial role in pooling resources (from various sources, e.g. the formal and informal labour market, welfare benefits, access to public employment and others) and providing support at times of hardship, as well as care services, to its members (Petmesidou 2006a).

Given the fact that social protection evolved around a Bismarckian social insurance model (but a greatly fragmented one), it is evident that it centres upon a male breadwinner component, though it represents a weak variation of this model. Income maintenance accruing to the male breadwinner has not been sufficient to cater for family welfare needs. Striking evidence concerns the comparatively low redistributive effect of social benefits and the persistently high poverty levels in Greece even before the crisis (Dafermos and Papatheodorou 2011). Equally deficient have been family policy (with very meagre family benefits) and other related policy fields (such as housing policy), even though the family is a main welfare provider. Statutory support to the family was substituted by an institutional configuration firmly linking a rent-providing statist model with ‘soft-budgeting’ practices pursued by individuals, families and enterprises that allowed budget imbalances to be transferred to the state through strategies of income appropriation by political means (that is, on the basis of access to clientelist poles of power). Within this framework, competition for the control of the ‘revenue yielding mechanisms of state power’ was paramount, creating a crucial dimension of social inequality (and social exclusion, for those groups unable to secure legitimate political credentials of access to state power), intertwined with inequalities based on market power. Needless to say such a mode of socio-political integration hardly favoured a social citizenship view of universalist welfare.

Reviewing briefly the welfare state effort in Greece, the following points can be made. First, as in the other SE countries, public responsibility for social welfare took off at a time (early 1980s) when the welfare states in North-West Europe came under pressure in the face of growing fiscal problems, new social risks, and a neo-liberal politico-ideological orientation that severely affected welfare state legitimacy (particularly in the Anglo-Saxon countries). Second, enactment of social rights and social programmes (e.g. implementation of a national health system) occurred in a much shorter time period compared to North-West Europe, a condition accounting for weak consolidation of new institutions. Soon fiscal constraints became highly pressing, particularly under the project of Greece's joining the European Monetary Union and the subsequent fiscal discipline requirements of the Stability Pact. Expansionary trends slowed down and an urgent need for welfare state retrenchment emerged, even though the welfare state hardly reached a level of maturity compared to North-West Europe (Guillén and Petmesidou 2008; Petmesidou 2013).

Third, a ‘hybrid’ welfare model was sustained under these conditions. Income transfers (mostly pensions, developed along occupational lines) have persistently been its major component. More than any other SE country, Greece developed a highly fragmented and polarised system with wide imbalances among the 130 social insurance funds in existence until recently. In the early 1980s, a social-democratic element was introduced with the establishment of a National Health System (NHS), indicating a path shift that, however, remained incomplete (private health expenditure kept growing and multiple health funds with inequalities in coverage continued to operate). As to social care services and social assistance, these have traditionally been a residual element of social protection based on means-testing, a characteristic that indicates a liberal orientation. Overall, the impact of welfare state interventions has persistently been very limited in reducing inequality, as is testified by the comparatively high Gini coefficient (0.343; EU-15 average 0.302, in 2007).

At the onset of the crisis, extreme fragmentation and polarisation in social insurance, swelling administrative costs and accumulated incentives for early retirement, in combination with rapid demographic ageing and negative economic growth hiked pension expenditure to over 13% of GDP (expected to nearly double by 2050). A reform enacted in 2008, with the ambitious aim to improve administrative efficiency by drastically reducing the number of social funds (from 130 to 13), masked the preservation of the system's complex structure, as the numerous constituent units of the new fund configurations retained their distinctive characteristics and regulations. Hence major predicaments remained, necessitating a wholesale reform for securing long-term sustainability of pensions; harmonising regulations across the numerous funds; achieving transparency of budget allocation (for instance, by clearly distinguishing between insurance and social assistance, as well as by separating pension funds from health insurance funds); and effectively tackling poverty among the elderly.

Equally, total health care spending grew steadily from about 6.5% of GDP at the time of the introduction of the NHS, in 1981, to about 9% in late 2000s. However, private expenditure has persistently been high, amounting to 40% of total health spending. It consists of out-of-pocket payments (according to OECD data, in mid to late 2000s, these stood well above 90% of total private health expenditure). Extensive reliance on out-of-pocket payments (part of it being under-the-table payments) and indirect taxation (by the mid 2000s about a fifth of total health expenditure was financed by taxation, with indirect taxes accounting for a large part of it) renders the system highly regressive (among others, see Davaki and Mossialos 2006; Petmesidou and Guillén 2008; Siskou et al. 2008). Furthermore, historically, the main obstacles to building a truly national health system in Greece were a serious lack of support by major social actors, conflicting interests within the medical community, discretionary privileges of particular social insurance funds, and complex ties between the public and private sector fostering corruption and waste of resources.

Social services are poorly developed and informal care within the family is key for meeting needs (Petmesidou 2006b). Growing demand for care due to changes in demography, family patterns and gender roles has progressively been met by female migrant labour (either as co-residing or day-care minders, Guillén and Petmesidou 2008: 75). An informal privatisation pattern thus emerged where the family still plays a coordinating role but care tasks are undertaken by foreign minders. Such arrangements, however, turn to be highly fragile under the impact of the economic crisis. Increasing hardship makes difficult for households to afford a paid caretaker and strongly exacerbates the need for a new framework for sharing of public/private responsibility in social care.

Notably, well before the onset of the crisis, there was extensive unmet need, as the above welfare pattern for a long-time sustained a divide between some fairly well protected social groups (enjoying access to the formal labour market and clientelistic networks), and a number of deprived social groups (the precariously employed, particularly in the underground economy; old-age people with no rights to social insurance or with insufficient coverage; unqualified young persons; the long-term unemployed and others). At the current conjuncture the critical question is whether the crisis can offer a window of opportunity for redressing the insider/outsider divide and widening the scope of institutionalised rights (e.g. by introducing a universal minimum income guarantee and the right to protection by the frail and dependent persons). Or, instead, cost-containment will be a downwards equalising attempt to a common low denominator, with detrimental effects on large sections of the population. While the verdict is still out, indications abound that the latter option may prevail.

Largely, under the bailout agreement, the main policy options embrace drastic falls in wages and salaries,⁶ significant hikes in indirect taxes⁷ and special levies⁸ that hit disproportionally low and middle-income earners; and considerable cuts in current and future pension entitlements, and social assistance benefits (a weak, anyway, element of income maintenance).

Markedly, in 2011, a tax reform significantly reduced the lowest taxable yearly income from 12,000 to 5000 Euros (that is, below the poverty line set at about 550 Euros for a single person at that time), and the new tax rates placed a disproportionately heavy burden on low to middle incomes (up to 35,000 Euros yearly; Kada 2011). Under the pressure of achieving budget compliance in the upcoming years, the tax reform agenda opened once more in late 2012. New legislation further extended the tax base to factor in low-income groups, and abolished tax breaks and allowances (hurting particularly low- to middle-income families with children). These are regressive measures severely squeezing Greece's already austerity-hit lower and middle class.

Harsh cuts in public health expenditure are prominent on the reform agenda too. These are pursued through merging (closing down) hospitals, applying e-procurement for generics and shifting the cost to the ‘consumer’ (by increasing private provision within the NHS and cutting the range of services covered under public health care). As to care services, persistent reliance on EU sources of funding and precariousness of employment for much of the staff (as hirings have been mostly on a temporary basis in programmes such as ‘home help’ and ‘day-care’) contribute to making them easy victims of austerity measures.

The need for rationalising a pension system ridden with inefficiencies and great inequalities in coverage, benefit level and funding is of high priority in the bailout agreement. In mid 2010 a ‘pathbreaking’ overhaul was approved by Parliament. This signposts a shift from a greatly fragmented, Bismarckian social insurance system (based primarily on the fist pillar), to a unified, multi-tier system that distinguishes between a basic (quasi-universal) non-contributory and a contributory pension, to be in force from January 2015. The amount of the basic pension is set at 360 Euros (but may be reduced if economic performance deteriorates), and the contributory part is linked to paid contributions. The basic pension is granted to old-aged uninsured persons (including people who paid contributions for less than 15 years) on condition that they satisfy specific requirements. The law also provides for an annual adjustment of pensions (from 2014 onwards) on the basis of a coefficient drawing on GDP fluctuations, on the consumer price index and the financial situation of pension funds.

Most importantly, as from 2015 the state's responsibility is limited to the basic pension. Henceforth, any deficits incurred by social insurance organisations should be dealt with by reducing pensions and/or increasing contributions. The government guarantee of auxiliary pensions was abolished too. The vague statement that the state guarantees the viability of the system so as to secure a decent pension for retirees, inscribed in the law in a last moment attempt by the Labour Minister to appease dissenters within the governing party, does not really alter the spirit of the reform.

Of crucial importance is system rationalisation attempted through the further amalgamation of social insurance organisations. Three major funds form the backbone of social insurance: IKA (the Social Insurance Organisation, until recently covering the majority of private sector workers, embraces public sector employees too); OAEE (the social insurance fund for self-employed workers, excluding liberal professions); and OGA (the farmers’ retirement fund). Exemptions for specific categories remained, though, as the government backtracked in front of strong resistance by the trade unions of journalists and media workers, doctors, engineers and lawyers to having their funds amalgamated to OAEE.⁹

The crux of the reform boils down to significant changes in pensionable income and replacement rates. Pensionable income will be calculated on the basis of earnings during the whole working career, rather than those of the last five years before retirement (as was the case until recently). The combination of shrinking pensionable income and a lower replacement rate will lead to significant reductions of pensions reaching progressively up to 50% for future retirees, as the new regulations will progressively come into full force from 2015 onwards (Institute of Labour 2010: 315). Stricter conditions were introduced for early retirement as well as for pensioners who continue working; measures were taken for equalising men and women's retirement conditions (in a phased-in way); and provisions were made for linking it to longevity (from 2021 onwards).¹⁰

An overhaul of the conditions concerning entitlement to disability is also under way, as cracking down on abuse constitutes a major aim. Yet in an attempt to drastically reduce spending on disability pensions from about 15% of total pension expenditure to 10% or even less, stricter regulations (and monitoring procedures) seriously affect also genuine cases of disability with significant rolling-back of provisions.¹¹

Under the pressure of serious fiscal woes of the country and alarming forecasts for rapidly increasing pension spending as the baby-boomer generation retires, fiscal sustainability criteria dominated policy options. Notably, the bailout agreement stipulates that the contribution of the state budget to pension expenditure should not surpass an increase by 2.5 percentage points of GDP through 2060. However, this is a very unrealistic premise, unless steep decreases of pension income will take place (further to the cuts already imposed) throwing even larger numbers of elderly people into poverty.

Importantly, the sustainability argument appears to be rather controversial on various grounds. First, particularly in the medium term, a hike in the number of retirees will increase pension expenditure (by about 1.2bn Euros over the next five years, according to estimates by the Ministry of Labour and Social Insurance). Yet, gloomy future forecasts for the economy (protracted deep recession and galloping unemployment) will make revenue of social insurance funds steeply plunge¹² and, thus, will seriously detract from the viability estimates of the reform plan. Second, contributions evasion persists unabated (it currently stands at a little over a fourth of IKA's revenues and about a third of those of OAEE and OGA), and huge arrears in contributions payments by enterprises put severe strains on social insurance. Third, corruption scandals (as is for instance the ‘structured-bonds’ scandal, back in 2007, involving a number of social insurance organisations), and absence of professional management of funds have been especially damaging on sustainability and fairness accounts.¹³ Furthermore, the over 50% haircut of bondholding imposed on social insurance funds under the PSI (that is, the Private Sector Involvement in a complex bond-swap programme implemented in March 2012 as part of the rescue plan) dramatically affected social insurance organisations as they wrote down losses over 12bn Euros.

Controversies concern also the harmonisation of regulations and the principle of universality in respect to the basic (flat rate) pension. Despite the aim to build a unified system and promote distributional fairness, exemptions remained for some socio-professional groups, as indicated earlier. Obviously resistance by the liberal professions to the merging of their distinct social funds with OAEE is accounted for by reasonable worries that such a reform would drag entitlements downwards for their funds.

Regulations for the provision of the basic pension manifest that this is not a fully universal benefit, as old-age persons not entitled to a contributory pension must fulfil certain income criteria in order to be eligible for it. Equally controversial are the ‘blurry messages’ of policy in respect to early retirement (or, conversely, to ‘active ageing’). On the one hand, the stated aim of the reform is to put the brake on early retirement. But, on the other hand, recent ministerial decisions facilitate early exit in the short- and medium-term for specific groups (e.g. for women aged 55 years and over with underage children and 18.5 years of work – a temporary measure that, however, led about 50,000 women to early retirement in 2010; provision of ‘notional insured time’ to parents and other similar regulations).¹⁴

Significant questions as to distributional fairness and sustainability emerge also in respect to a special (intergenerational solidarity) levy, introduced in August 2010 (ranging initially between 3% to 10% of gross monthly (basic) pension income, but raised up to 14% in early 2012),¹⁵ in order to create a contingency fund for social insurance organisations. Contrary to the expressed aim for this levy to contribute to a pension reserve fund for meeting future financial strains on social insurance, legislation passed in October 2011 in a dubious way made the Ministry of the Interior co-responsible for the administration of the resources of the reserve fund, allowing thus the use of (part of) these resources for plugging holes in the debt-stricken local authorities.¹⁶

Structural changes in the pension system are often of a long-term perspective, with no significant immediate impact. Nevertheless, rapid phase-in arrangements and, mostly, across the board cuts in pension incomes deal a serious blow to the living standards of large groups of present day retirees. Over 2010 and 2011 austerity measures led to about 3bn Euros cuts in pensions amounting to a reduction close to 10% of total pension expenditure. Moreover, from January 2012, gross basic pension incomes exceeding 1300 Euros monthly were reduced by 12%, and progressive cuts by 10% to 20% for auxiliary pensions (up to 250 /over 300 Euros, respectively) were introduced.¹⁷ Income losses hurting particularly low-income pensioners were incurred, also, as a result of the abolition of ‘Christmas’/'Easter’ and ‘Vacation’ benefits, as well as of the (means-tested) ‘heating benefit’ provided by the National Social Cohesion Fund (established a few years ago in order to administer social assistance but abolished before becoming fully operational), and stricter targeting rules for the provision of EKAS (a social solidarity benefit). Massive cuts (by nearly 80% for some social funds) in the one-off payment to retirees dealt a further blow to pensioners’ living conditions.

The most recent available data on poverty refer to 2010 incomes (EU-SILC data for 2011). Thus, they do not fully capture the effects of harsh austerity measures in the following years. Elderly people have persistently faced a higher poverty risk than the total population. A downward trend, evident prior to the crisis, has been reversed (Petmesidou forthcoming). The aggregate poverty rate rose from 20.1%¹⁸ in 2008 (2007 incomes) to 21.4% in 2011 (2010 incomes; respective EU-27 average rates 16.3% and 16.9%); while the poverty rate for people 65 years or over rose, accordingly, from 22% to 24%. Alarmingly, the combined at-risk-of-poverty and/or social exclusion aggregate rate reached 31% (affecting 3.5 million people in Greece; EU-27 average rate 24.2%). It stood at about 34% among old-aged people (75 years or over; 36% among old-aged women).

Evidently, crucial challenges remain in respect to fiscal rationalisation and distributional justice, while drastic cuts seriously aggravate poverty and deprivation among the elderly.

Four decades passed since the establishment of the NHS, and the system hardly reached the state of a fully fledged national health service. Both in terms of funding and service delivery a mixed system continued to operate until recently: an occupation-based health insurance system, combined with a national health service, in parallel with expanding private provision. Soaring hospital deficits over the last decade, persistent fragmentation of health insurance and inequalities in the scope of coverage, as well as lack of coordination between primary and secondary care were the main predicaments. The bursting of the public debt bubble made system rationalisation a key priority. However, how far, in the context of harsh cuts, a balance between efficiency and fairness can be achieved remains an open question. Particularly in the case of social care, spiralling budgetary pressures over the last couple of years seriously threaten even the so far rudimentary provision.

Strikingly, despite comparatively high (total) health expenditure, life expectancy over the last decade rose by only one and a half year, indicating a limited effectiveness of health care. Most importantly, a difference of about 16 years for women and 12 years for men between life expectancy and healthy life years (at birth)¹⁹ indicates a bad health status for old-aged people and, particularly, for old-aged women.

Moreover, as indicated by the EU-SILC data on ‘self-reported health status’ (Table 1), even before the crisis had fully stricken, inequalities in respect to people with ‘very bad’ health status manifested a deepening trend. The gap between the top- and mid-income quintile significantly increased, as the percentage of people in the latter quintile, who perceive their health status as ‘very bad’ rose rapidly over the second half of the 2000s; and the gap between the top- and bottom-income quintile only slightly decreased. These findings contrast with trends in other SE countries (e.g. Spain, where an improvement is recorded in the second half of the 2000s).

Poorly developed public (and preventive) health care policies partly account for these conditions. The deepening economic crisis is forecasted to have further negative effects on the health status of the population (Kentikelenis et al.2011). Available studies also indicate adverse effects of financial strain on mental health (reflected on a 40% increase of the annual suicide rate; Economou et al.2011). Demand for public health services has significantly risen (by about 35% since 2009, according to the Ministry of Health). Yet, dramatic cuts in public health-care spending (over 40% between 2009 and 2013), shrinking number of beds (even in intensive care units), decreasing public health personnel and roll-back of coverage do not augur well for meeting rising demand for public provision.

A major predicament of the NHS has repeatedly been the accumulation of huge hospital arrears and unpaid bills.²⁰ In June 2010 the outstanding deficit by public hospitals (for the period 2005–2009) amounted to about 5bn Euros. Bitter conflicts with medical equipment suppliers, drug makers and pharmacists often lead to deadlocks and boycotts imposed on procurement. These cause serious shortages of essential items in the public hospital system that obstruct medical treatment and in certain cases put patients’ lives at risk. Despite the deal reached with suppliers about three years ago²¹ and cost-containment measures following the outbreak of the crisis, in late 2011 new outstanding hospital debt for medical supplies reached 1.1bn Euros, and for pharmaceutical bills (by hospitals and social insurance funds) 1.2bn Euros.

Legal changes enacted over the last few years provide for the all day operation of hospitals and health centres and the charging of fees per visit in the afternoon shift to outpatients (covered only partly by social insurance); the enforcement of a 5 Euros fee for all (regular) outpatient services;²² a new drug-pricing system that sets the price of drugs on the basis of the average of the three lowest-priced markets in the EU; in parallel with the phased introduction of e-prescribing for social insurance funds, the greater penetration of generics, electronic auction for hospital supplies and systematic accounting and auditing techniques at hospitals.²³ Undoubtedly, because of considerable technical complexities in the health sector, pressures and intense conflicts due to high stakes (often producing collusion of interests nurturing corruption), and multiple, simultaneous changes attempted, a considerable time span is needed for reforms to yield results and be assessed for effectiveness.

Nevertheless, so far it is evident that fiscal concerns predominate in policy reform overshadowing any other issues and priorities (e.g. quality, equity and access criteria). Huge savings (amounting even up to 90% cuts in spending, according to the Ministry of Health) in the procurement of drastic substances and less expensive generics and medical consumables have been strongly contested by the Federation of NHS Medical Doctors’ Associations on the ground of compromising quality.²⁴

In a similar vein, the attempt by the government to amalgamate health insurance funds into a unified organisation – EOPYY, the ‘National Health Services Organisation’ – has been hotly debated by relevant stakeholders. A thorny issue is how out of some ‘ailing’ health insurance funds, and with diminishing resources, quality of service provision will be secured. Strikingly, a report by the Health Experts Committee submitted to the Minister of Health about three years ago warned that the planned 0.6% of (a rapidly diminishing) GDP as a subsidy to EOPYY is negligible, when, only for IKA, the subsidy (for health insurance) amounted to 1.2% of GDP prior to the amalgamation.²⁵ Moreover, the creation of one more national health organisation, EOPYY (in parallel to the NHS), with a hybrid form – namely a funding agency (for both primary and hospital care) but also a provider of primary care services – raises problems for system rationalisation. Alternatively, making EOPYY a single funding agency for public health care, and transferring and reorganising all primary care provision under the NHS would be a step forward to better planning and allocation of resources.

Organisational and administrative reform of the NHS is also high on the agenda through the amalgamation or even the closing down of clinics and hospitals. Administrative staff shortages are intensifying due, among others, to the policy of layoffs with the aim to considerably shrink the public sector in the coming years. In addition the shortage of physicians (because of retirements and the drastic slowdown of recruitment) and, particularly, of nursing staff seriously affects service delivery.²⁶

Equally important is rising employment flexibilisation of medical personnel in EOPYY health units. Medical associations repeatedly expressed worries, also, about a bleak scenario of ‘a sort of medical sweatshop’ with medical companies creating primary care franchises in which ‘a plethora of unemployed Greek medical doctors will work for a minimum wage’.

Markedly, a new front of mobilisation of medical staff is closely linked with the ‘non-payment movement’ gathering momentum in Greece over the last three years (where people refuse to pay highway tolls, extra levies and public transport tickets, expressing thus their indignation about sharp rising rates and ad hoc taxes). In public hospitals this new front of mobilisation concerns the ‘entrance coupon’ for all regular visits to outpatient hospital departments. It consists in the occupation of cashier's office by medical staff so as to allow patients free entrance.

It is too early to pass judgement on a reform that is in progress amidst serious sovereign debt problems, uncertainty and acute confrontations with stakeholders. Suffice it to say, however, that drastic cuts and deterioration of public health provision in parallel with further increasing privatisation (due to rising fees and co-payments) impact negatively on access and equity criteria, not to mention service quality which is rarely alluded to in public documents. Seemingly a drift towards rolling back public provision and levelling down quality has begun,²⁷ though whether this will irreversibly lead to residual protection is an open question.

Statutory care services are mostly geared towards institutional care, albeit falling far short of existing needs. Developments over the last decade or so about (i.e. domiciliary care and day-care centres for frail elderly people, centres for early diagnosis of disability, counselling and vocational training to disabled citizens and other similar projects targeted to deprived vulnerable groups) have extensively relied on EU initiatives and funding. Discontinuity in financing and precarious employment conditions for much of the staff affect negatively personnel morale and service quality. Informal privatisation through service provision within the family by paid carers rapidly expanded over the last 10 to 15 years, as mentioned above. Problems abound, however, ranging from unmet need to serious burdens placed on families. Under deteriorating economic conditions the salience of a double-bind confronting women is evident, namely opportunities for full-time paid career are seriously diminishing (female unemployment reached 31% in spring 2013), while at the same time the rolling back of the even rudimentary services seriously hampers reconciliation of family care and work.²⁸

Table 1 (above) clearly indicates that care needs increased over the second half of the 2000s, as the percentage of people who experience severe limitations in their daily activities significantly rose across the income hierarchy (but the gap between the top- and mid-income quintile slightly widened). Yet, private arrangements for care provision become all the more difficult as economic hardship intensifies; while the prospects for enhancing statutory provision under the ‘structural adjustment plan’ are rather dim.

Evidently, harsh austerity measures highly prioritise fiscal contraction with detrimental effects on the weak Greek welfare state. To this testifies also the dismantling of employment protection under the strong insistence of the international creditors. Policies already under way include: the shift towards enterprise labour contracts (or individual contracts), and the undermining of the collective negotiation process itself, by the ‘troika's’ insistence on the reduction, by government fiat, of the private sector minimum wage by 22%, in February 2012;²⁹ sub-minimum wages for youth; significant cuts in subsidies to OAED (the Greek Labour Force Employment Organisation) that will eventually cause a further drop in the unemployment benefit (in addition to the reduction from 460 to 359 Euros because of the fall in the minimum wage); easing of dismissals and employment flexibilisation.³⁰ Hence, instead of the crisis providing an opportunity for improving social protection of the ‘outsiders’ (i.e. all these weakly protected social groups under the arrangements that prevailed in the past), it rather leads to the dismantling of social rights of the ‘insiders’, intensifying insecurity and driving down labour and welfare standards to a low common denominator.

All of the above trends add up to rising hardship among large sections of the population, weakening family/kin networks that fulfilled a stabilising role in social protection, diminishing opportunities predominantly for the young, and deepening insecurity in respect to employment and retirement conditions. While, in parallel, demand for social welfare provisions increases, albeit from a progressively enfeebled welfare state. In view, also, of the weak roots of a ‘politics of solidarity’ in the past and recent history of the Greek social protection system – that could encourage buy-in from a wide range of middle-class strata into universalist welfare-, what are the prospects of collective welfare under structural adjustment?

In an attempt to briefly layout the contours of an answer to this question – given the rapidly changing conditions – of crucial importance is whether the structural adjustment measures will have lasting negative effects on the living standards not only of the most vulnerable social groups but also of large sections of the middle class. Even though there are not yet sufficient quantitative data on these issues, anecdotal evidence available from NGOs, mass media and other sources report that an even greater number of households in Greece (as also in the other SE countries) that until recently considered themselves as middle class with great difficulty can make ends meet (even more Greeks, Portuguese and Spaniards turn to food banks and seek help to get by, because they lost their job, went bankrupt, or had their home repossessed due to mortgage arrears; Petmesidou 2011a).

Clinging to neo-liberal recipes of swingeing austerity will bring protracted recession, increasing unemployment and economic hardship. Under these conditions a considerable number of middle-class households will sink into deprivation (and poverty), as large numbers of the self-employed, small businesses and the salaried (mostly of the public, but also, of the private sector) will be decimated by structural adjustment and protracted economic downturn. Eventually, under the emerging socio-economic reconfiguration the gap will deepen between some upper sections of the middle strata that will comfortably increase their economic and socio-political resources and a large spectrum of socio-occupational groups progressively losing ground (Petmesidou 2011a, b). Such an alarming scenario of large and rigid social gaps leaves little room for optimism for a politics of solidarity, which, as the history of the social-democratic welfare state shows, requires the existence and support of a large, cohesive middle class. It is a highly probable development, though, as the European integration project seems to be crumbling causing serious doubts about the future of the European Social Model.

Maria Petmesidou, Professor of Social Policy at Democritus University of Thrace and Fellow of CROP/International Social Science Council. Her research interests are in the comparative analysis of social welfare, poverty and social exclusion in Southern Europe and the broader Mediterranean region; social stratification and social development; labour market and employment policies. She has published many books, chapters in edited volumes and articles in journals. Recent publications (in English): What future for the middle classes and ‘inclusive solidarity’ in South Europe, Global Social Policy, 2011; Southern Europe, in: International Handbook of the Welfare State, Routledge, 2013; Is the crisis a watershed moment for the Greek welfare state? The chances for modernization amidst an ambivalent EU record on ‘Social Europe’, in: The Greek Crisis, Palgrave, forthcoming. E-mail: [email protected]