Greece is experiencing particularly difficult financial circumstances, with considerable pressure on its public finances. Unemployment and poverty rates are increasing every day. The passing of Law 3808/2009 on the granting of social solidarity aid offers some relief for more than two million Greek citizens who may be categorised in financially weaker groups. The money will be collected from major corporate profits and people owning significant real estate property.
New law on financial aid
With increasing pressure on the country’s public finances, the Greek government passed Law 3808/2009 on ‘Extraordinary financial aid of social solidarity, extraordinary social responsibility contribution of major enterprises and major real estate property, and other provisions’ in December 2009. This law means that 2.55 million salaried employees, pensioners and farmers with very low incomes and socially vulnerable groups will receive financial aid ranging from €300 to €1,300.
The money is paid in two instalments, by 31 December 2009 and by 30 June 2010.
Beneficiaries
More specifically, the following people are entitled to receive such support:
- taxpayers who during the financial year 2009 or financial year 2008 were fiscally responsible for dependent persons such as unmarried children aged under 18 years, unmarried adult children aged up to 25 years who are university students or serving military duties, unmarried adult children aged up to 27 years who are unemployed and children with disability in excess of 67%. This eligibility is subject to the following conditions: half or more of the total family income must originate from salaried work, a pension or farming and it must not exceed €15,000 for beneficiaries with one child or €26,500 for beneficiaries with six children or more;
- pensioners of the Agricultural Insurance Organisation (Οργανισμός Γεωργικών Ασφαλίσεων, OGA) and any other primary insurance organisation, including the state, provided that they are already entitled to the Pensioners Social Solidarity Benefit (Επίδομα Κοινωνικής Αλληλεγγύης Συνταξιούχων, EKAS);
- disabled people receiving welfare benefits, persons suffering from kidney disease or those having a transplant and receiving a daily expenses allowance, people receiving aid for dependent children, holders of a non-insured person card and uninsured foreigners and political refugees who are financially vulnerable;
- persons who, on 3 November 2009, were registered as being long-term unemployed with the Labour Force Employment Organisation (Οργανισμός Απασχόλησης Εργατικού Δυναμικού, OAED), those receiving unemployment benefit from OAED, beneficiaries of special benefits and unemployed persons listed with the Merchant Marine Employment Agency. Special benefits include the benefit following termination of the unemployment subsidy (worth 13 wages), the benefit after being listed on the unemployed register for three months and the benefit granted to persons released from prison.
The aid is tax-free, is not subject to any withholding, is not seized and cannot be offset against already attested debts to the state or credit institutions. In addition, it is not included in income limits for the payment of the EKAS benefit or any other social or welfare allowance.
Sources of funding
The money for the solidarity benefit originates from the:
- extraordinary contribution of social responsibility imposed on major corporate profits. It is estimated that 300 enterprises – that is, 0.14% of all companies in Greece – having a net income over €5 million a year will have to make this contribution;
- large real estate property of natural persons. Some 60,000 people are liable to the Unified Property Tax, as they own property with a rateable value of more than €600,000. This represents 1.7% of property owners;
- increase in the Unified Property Tax of non-profit legal entities.
Reactions of social partners
The social partners have welcomed the government bill with respect to the social solidarity benefit and the extraordinary contribution imposed on enterprises and valuable real estate property. The Scientific Advisor of the Greek General Confederation of Labour (Γενική Συνομοσπονδία Εργατών Ελλάδας, GSEE), Giorgos Romanias, emphasised before the Financial Affairs Committee of the parliament that GSEE supported the bill. This was because the new law affected 448,000 families, meaning that it would probably exceed three million beneficiaries. Mr Romanias suggested providing the money as soon as possible to give a boost to the market during Christmas time. He also proposed granting the benefit to those meeting the 2008 income criteria whose family status had changed – for instance, if a child was born in early 2009. In addition, Mr Romanias urged the government to take steps to quickly identify persons having an income of less than €6,000 a year and, thus, not submitting any tax return. Finally, he proposed widening the scope of the bill to include people who are officially self-employed but who rely on one employer – such a worker is known as an economically dependent worker.
The President of the Hellenic Federation of Enterprises (Σύνδεσμος Επιχειρήσεων και Βιομηχανιών, SEV) Dimitris Daskalopoulos, made the following statement about the extraordinary contribution imposed on enterprises:
‘the national business sector knows perfectly well that the economy is in a state of emergency and is willing to pay this extraordinary contribution and make the necessary efforts to deal with the fact that public finances have gone off the rails...’
However, the President of the Athens Chamber of Commerce and Industry (Εμπορικό και Βιομηχανικό Επιμελητήριο Αθηνών, EBEA), Constantinos Michalos, and the President of the Hellenic Management Association (Ελληνική Εταιρεία Διοίκησης Επιχειρήσεων, EEDE), Konstantinos Lambrinopoulos, expressed their strong opposition to the bill.
Finally, it should be noted that the bill was accepted by a majority of the parliamentary political parties.
Commentary
Greece is currently experiencing its gravest financial upheaval ever, as it seeks effective solutions to reduce the state deficit. A fiscally neutral law – in other words, that is not a burden for the state budget – seems to indicate that, if a way out of the crisis is the primary objective, building a society based on social and economic justice that will be humane to those in need is a crucial element.
Elena Kousta, Labour Institute of Greek General Confederation of Labour (INE/GSEE)