- Observatory: EurWORK
- Working poor,
- Labour market change,
- Published on: 05 April 2010
Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
Greece has the highest proportion of working poor in the EU27. In-work poverty is directly associated with low wages, inability to find a full-time job and low skills. It is also associated with the existing system of taxation and the lack of an effective, well-planned social policy. Policies are needed to increase workers’ share in output, promote full-time, permanent employment, adopt some form of guaranteed income and reinforce graduated income taxation.
Definitions and aims of study
The ‘working poor’ are a section of the population that is difficult to define not only due to a lack of specific data but also because the concept combines two levels of analysis: the working status of individuals and the wages that they earn from employment (individual level), and the extent to which they have a poverty-level of income within the household context (collective level).
The aim of the comparative analytical report is fourfold:
to obtain an insight into the extent of in-work poverty in different European countries and the characteristics of those affected;
to examine policies in place to tackle the problem of people in work on low levels of income and any assessments which have been carried out into the effectiveness of such policies;
to consider the views of social partners towards the working poor;
to investigate the effect of the current economic recession on the scale of in-work poverty.
For the purpose of the study, the working poor are defined in the same way as the indicator used by the European Commission to assess and monitor in-work poverty. Therefore, the working poor are those who are employed and whose disposable income puts them at risk of poverty. The expressions ‘working poor’ and ‘in-work poverty’ are thus used interchangeably.
‘Employed’ is defined here as being in work for over half of the year and ‘risk of poverty’ is defined as having an income below 60% of the national median. Income is measured in relation to the household in which a person lives and covers the income of all household members, which is shared equally among them after being adjusted for household size and composition. Accordingly, if persons are at risk of poverty, this may not be simply because they have low wages but because their wages are insufficient to maintain the income of the household in which they live at a certain level. Equally, a person can earn a very low wage but not be at risk of poverty because the income of other household members is sufficient to raise the overall household income above the poverty threshold. The study covers people on low wages, or low earnings in the case of self-employed persons. Low wages, defined in an analogous way as low income – that is, below 60% of the median earnings of those in full-time employment – potentially put individuals at risk of poverty. The risk is likely to increase in the current economic crisis as companies introduce various measures to try to cut wage costs while keeping people in employment by reducing their working hours, giving them extended leave or simply cutting wages.
The characteristics of the people concerned are also important, particularly their age, with young people and, in some cases, older workers being more likely to be employed in low-paid jobs. Women are more likely than men to be employed in low-paid jobs, even allowing for the relatively large number of women working part time. However, the statistics show that, if they are in work, women are on average across the European Union less likely than men to live in households with a poverty-level of income. Nonetheless, they are more likely than men to live in circumstances which put them at particular risk of poverty, such as being a lone parent in many countries. In addition, migrants are particularly vulnerable to being among the working poor, since they tend to combine various adverse characteristics, such as working in low-skilled jobs with low rates of pay and living in single-earner households.
A set of tables containing the data available at EU level on the working poor and on people with low wages was included in an annex to the questionnaire (see Annex 1 of the overview comparative analytical report). The data concerned derive from the EU Statistics on Income and Living Conditions (EU-SILC) for 2007, which are the latest available data and relate to the position in 2006. The national correspondents are asked to comment on the table findings for their country and to supplement the data included with data from national sources where possible and where these help to interpret the situation or add to the information included in the tables. The EU-SILC tables, for example, do not cover the position of migrant workers. The correspondents are also asked to specify the source of any additional data and the definitions used where these differ from those on which the table is based.
1. Scale and nature of in-work poverty
1.1 Please comment on the figures for the working poor for your country shown in the attached tables and what they indicate about the scale and nature of this. Please refer to any additional data available from national sources or any studies which have been undertaken if these provide additional information in this regard and help to give an insight into the issue.
Greece has the highest proportion of working poor in the 27 EU Member States (EU27), at 14% (see Table A1 in Annex 1 of the comparative analytical report). An analysis of the distribution of the poor population shows that 32% are in work, 8% are unemployed, 27% are pensioners and 33% are other economically inactive persons, according to 2004 data of the National Statistical Service of Greece (Εθνική Στατιστική Υπηρεσία της Ελλάδος, ESYE). Thus, despite the fact that unemployed people incur a much higher risk of poverty, they represent a relatively small proportion of overall poverty. Working people and pensioners have the biggest share of poverty.
In the case of permanent employment, the poverty risk rates are at the same levels in Greece and in the 25 EU Member States before the accession of Bulgaria and Romania in 2007 (EU25), at 5% (see Table A4 in Annex 1 of the comparative analytical report). However, in all other instances, the rates of poverty are much higher in Greece. For temporary employment, the poverty rate is 19% in Greece, compared with 13% in the EU25; for full-time employment, the poverty rate in Greece is almost twice as high as in the EU25 (13% and 7% respectively); and for part-time employment, the poverty rate in Greece is almost 2.5 times higher than in the EU25 (27% and 12% respectively). In fact, in Greece, part-time employees incur a higher risk of poverty than those ‘not employed’ and ‘other inactive’ (both 25%).
Thus, it can be seen that – with the exception of permanent jobs – in Greece, work protects people less from poverty than in any other country of the EU25.
1.2 Please comment on recent trends, giving any data or other evidence available to indicate whether the number of working poor has tended to increase or decline, between 2000 and 2007, especially considering women, young and older workers, self-employed, migrants.
According to the studies, only slight fluctuations have occurred and without any clear trend. However, no specific details were found.
1.3 Please outline the main findings of any research studies which have been undertaken in your country on the working poor or on low pay, more generally, and what they reveal about the characteristics of the people concerned and the jobs that they do and how these might be changing over time.
Studies of poverty in Greece span the period between 1974 and 2006 (see references at end of report). Their conclusions may be summarised as follows.
Financial inequality and poverty in Greece decreased substantially in the 1974–1981 period, and since then have remained at the same general levels, with slight fluctuations and without any clear trend.
Most groups at high risk of poverty did not change substantially over the last 30 years. Due to changes in the composition of the population, however, the share of such groups in forming the overall level of poverty has changed significantly during the same period. In the late 1970s, poverty was mainly a problem of agricultural areas, but as years pass it has become more a problem of retired people.
Households whose heads are self-employed in the agricultural sector, employed part time or unemployed experience the highest risk of poverty. However, households whose heads are pensioners, employed or self-employed except in agriculture have the highest share in poverty (65.7% in total).
Despite the differences in median income observed among various population groups, the greatest part of total inequality is due to the inequality existing within the groups.
From an examination of the redistributive effectiveness of social benefits, the main conclusion is that such benefits reduce the level of poverty; however, their impact in Greece is considerably smaller than in any of the other EU Member States. According to 2006 data, the impact of social transfers – apart from pensions – reduces the poverty risk in Greece by only two percentage points (from 23% to 21%, or a 9% reduction in poverty risk), whereas in the EU27 it effects a reduction of 10 percentage points (from 26% to 16%, or a 38% reduction in poverty risk).
Education significantly reduces the risk of poverty.
2. Policies towards working poor
2.1 Is the issue of in-work poverty seen as an important problem in your country for the government to address? Has the issue become more or less important in the policy debate over recent years? To what extent is there seen to be a conflict between reducing the number of working poor in your country and increasing the number of people in work?
In recent years, most innovative initiatives in the context of modernising the labour market are targeted not at the working poor but at unemployed people, through the promotion of active employment policies. Mainly subsidised training and work experience programmes in the private, public and broader public sectors of the economy are being implemented on a wider scale. However, the trade unions and the Economic and Social Council of Greece (Οικονομική και Κοινωνική Επιτροπή της Ελλάδας, OKE) have criticised the implementation of these programmes; they believe that such initiatives only seek to reduce the official unemployment rate at the expense of job quality and that they create in-work poverty and have a ‘social dumping’ effect. More specifically, such programmes are believed to:
shift the cost of reducing unemployment to society as a whole;
violate the provisions on employment of indefinite duration, since workers have been placed in steady jobs by renewing successive work-experience contracts;
draw resources away from social insurance, since full insurance coverage is not provided;
create a group of low-paid second-class workers.
2.2 What kinds of policy have been devised to address the working poor issue in your country? On which particular area have national policies tended to focus on: labour market, social protection, fiscal policy or some combination of these policy areas? Which particular groups are policies targeted at: workers, employers, families?
The question of in-work poverty is posed mainly on the basis of supporting vulnerable population groups in the context of taxation and social policy, including benefits policy, social insurance, free education and health, and support for large families.
2.3 Please describe the main measures taken for improving the income situation of the working poor. Are there any fiscal measures in place, in the form of tax credits, or in-work benefits more generally, for maintaining or raising the income of those in employment with low earnings? Are there any social transfer schemes in place to ensure that the income of households exceeds a minimum level, even if the people in the household are in work? If so, please outline their main features, including whether or not they apply to the self-employed as well as employees.
The main measures taken for improving the income situation of the working poor are as follows.
For paid employees and pensioners, annual incomes of less than €12,000 are not taxed. For non-paid workers – such as self-employed persons, traders, farmers and individuals depending on rental income – annual incomes of less than €10,500 are not taxed.
For young self-employed people with low incomes, subsidy schemes providing a lump-sum monetary benefit are sometimes offered.
Article 142 of Law 3655/2008 targets working women, with a special benefit for the protection of motherhood, irrespective of income.
A National Social Cohesion Fund is also planned. According to the National Strategy Report on Social Protection and Social Inclusion 2008–2010, this fund will finance programmes to provide targeted income support. In order to meet its objectives, the fund will initially receive financial support of €100 million.
Other provisions to combat poverty are mainly addressed to people with large families, such as a large family allowance and a lump-sum payment of €2,000 for the birth of the third child and each subsequent child.
No form of guaranteed income exists in Greece, unlike the vast majority of countries in the EU27.
2.4 Please assess the role that minimum wage legislation plays in limiting the number of working poor. Please indicate the nature of the regulation (statutory/legislative/collectively agreed/sectoral) in your country and how the minimum wage varies between different groups of worker.
In Greece, minimum levels of salaries and wages are set by the National General Collective Agreement (Εθνική Γενική Συλλογική Σύμβαση Εργασίας, EGSSE), which is signed every year or every two years. The EGSSE covers all workers in the private sector, and makes a distinction between blue-collar and white-collar workers; it has the force of law. Wage increases for public servants are made by presidential decree. Based on the most recent EGSSE for 2008–2009, which was signed in April 2008, the minimum monthly wage of an unskilled worker with no previous employment was €803.50, calculated for 2008 on an annual basis, including Christmas, Easter and summer bonuses.
Greece has a large number of working poor. Work offers less protection from poverty than in other countries, due to low earnings and a weak system of social protection. Thus, any real increase in minimum wages is an important tool for combating poverty, although it is inadequate if not accompanied by other measures to support low-income groups.
2.5 How effective are the policies in place for reducing the number of working poor? Please refer to any survey, research studies or policy evaluations which have been undertaken to assess the measures in place.
According to the Annual economic and employment outlook for 2008 (in Greek) of the Labour Institute (Ινστιτούτο Εργασίας, ΙΝΕ) of the Greek General Confederation of Labour (Γενική Συνομοσπονδία Εργατών Ελλάδας, GSEE), in 2005 the poverty gap ratio stood on average at 22% in the EU. This gap expresses the total amount of money that would be needed to raise poor people from their present income to the poverty line. At 26% (up from 24.1% in the previous survey), the poverty gap ratio in Greece is one of the highest in the EU, on the basis of data from the 2006 EU-SILC. As highlighted in the INE/GSEE outlook for 2008, this means that about half of poor people in Greece have incomes so low that their chance of escaping poverty is remote. The INE/GSEE outlook also shows that Greece has the worst performance in the EU27 with regard to the effect of other social transfers apart from pensions. More specifically, in Greece:
as noted earlier, the effect of social transfers apart from pensions reduces the poverty risk by only two percentage points (from 23% to 21%, or a 9% reduction in poverty risk), whereas the figure for EU27 is 10 percentage points (from 26% to 16%, or a 38% reduction in poverty risk);
the income of the 20% of wealthiest people is consistently around six times higher than the income of the 20% of least wealthy persons;
as mentioned above, there is no form of guaranteed income, unlike the vast majority of countries in the EU27.
Thus, a relevant question is whether policy measures should merely aim for temporary income support so that some individuals can rise above the poverty line, or whether the issue of redistribution of income and wealth should be examined more broadly for addressing poverty and income inequalities.
3. Attitudes of the social partners to the working poor
3.1 What is the attitude of the social partners in your country to the issue of in-work poverty? Is there any debate on the relative priority to be given to the quality of jobs and working conditions as against the quantity of jobs? What has been the impact of the present recession on their positions and on the actions taken towards reducing in-work poverty?
The employer organisations mainly discuss investment in the knowledge economy and ‘green’ jobs (see Greek contribution to the European Industrial Relations Observatory (EIRO) comparative report Greening the European economy: Responses and initiatives by Member States and social partners). Employers also focus on support for training and lifelong learning programmes, and subsidised jobs.
GSEE’s principal position on the issue of addressing in-work poverty primarily involves establishing a guaranteed minimum income and promoting full-time steady jobs, combating undeclared work and investing in the knowledge economy and green jobs. The trade union confederation also demands an increase in the proportion of gross domestic product (GDP) allocated to health and education.
The social partners’ positions on addressing the impact of the economic crisis on employment have been reported (in Greek, 166Kb PDF) in the context of the Economic and Social Council (Οικονομική και Κοινωνική Επιτροπή, OKE). Their proposals do not refer directly to the working poor, but rather to preserving jobs and income, and are summarised below.
The Hellenic Federation of Enterprises (Σύνδεσμος Επιχειρήσεων και Βιομηχανιών, SEV) proposes the following:
active lifelong learning policies for workers in declining economic sectors;
a state contribution towards part of the social insurance contributions of young people without work experience for a certain period of time – for example, 12 months;
a temporary reduction in social insurance contributions to an amount corresponding to contributions for basic pay for business start-ups in 2009 and enterprises employing fewer than 10 people.
The General Confederation of Greek Small Businesses and Trades (Γενική Συνομοσπονδία Επαγγελματιών Βιοτεχνών Εμπόρων Ελλάδας, GSEVEE) makes the following recommendations:
incentives to preserve jobs in small enterprises, particularly in districts where unemployment is high, by subsidising wage and non-wage labour costs;
subsidies for employer contributions in very small enterprises that promise to maintain jobs for two years.
The National Confederation of Greek Traders (Εθνική Συνομοσπονδία Ελληνικού Εμπορίου, ESEE) suggests the following:
subsidies for wage and non-wage costs in exchange for a promise to preserve existing jobs in companies that are demonstrably obliged to cut jobs;
tax deductions through the creation of tax-exempt reserves in enterprises that promise to maintain jobs for two years.
GSEE proposes the following:
targeted state aid to support small and medium-sized enterprises (SMEs), as well as sectors and branches of the Greek economy that are directly threatened by the financial crisis, such as tourism and construction;
a prohibition of dismissals, layoffs or compulsory leave for the duration of the economic crisis;
staffing and activation of all monitoring mechanisms for strict implementation of labour legislation.
3.2 Do trade unions have explicit policy proposals for reducing the number of people on low wages? If so, please outline the main features of these. Do such proposals include complementary schemes on healthcare, pensions and family support to help increase the effective income of workers? Do trade unions see a specific role for themselves in implementing and managing such schemes? What level of importance is attached to reducing the number of working poor in relation to creating more jobs or keeping more people in employment?
GSEE mainly approaches the problem of low wages through collective bargaining and in particular by setting across-the-board minimum pay rates at national and industry-wide levels.
In other respects, GSEE’s basic proposals for tackling poverty are addressed to the state and may be summarised as follows:
establishment of a minimum guaranteed income;
promotion of the model of full-time, steady employment;
measures for people on low pensions and low pay, and for the respective households living below the poverty line;
withdrawal of measures that place a tax burden on employed earners and pensioners;
support for motherhood and for workers with family obligations;
more resources for social policy through curtailing the informal economy, higher tax rates for very high incomes, graduated taxation for public limited companies (plcs) and limited companies, taxation of church property, taxation of luxury consumption, taxation of cross-border movement of capital and heavy taxation of investments made through offshore companies;
increased social expenditure on education and health, and re-establishment of the national health system.
3.3 Do employers generally support measures for reducing the extent of in-work poverty? If so, indicate the principal measures they support and implement themselves such as respecting minimum wage levels, ensuring adequate basic rates of pay, paying suitable amounts for working overtime or in bonuses.
In recent years, the employer organisations – especially SEV, representing large companies – focus not on the need to increase the level of pay but on implementing public policies by which the cost of reducing poverty and unemployment is shifted to society as a whole.
4. Effect of current economic recession on in-work poverty
4.1 Is there any evidence that the number of working poor has tended to increase during the present recession (as a result of reduction in wages and/or working time)?
In January 2009, the number of unemployed people was 465,692, representing a 19.3% increase on January 2008, and the unemployment rate grew from 7.7% in 2008 to 9.4%. In parallel, more companies are trying to cut operating costs by diversifying employment relationships. According to the latest announcements from the Governor of the Bank of Greece (Τράπεζα της Ελλάδας, TtE), a substantial decrease in average working time is expected, both due to cutbacks in overtime and also to a reduction in regular working hours in certain enterprises. The already high rate of undeclared work in the Greek labour market is expected to increase further. It is therefore estimated that the number of working poor is rising.
4.2 Have any surveys or studies been launched since the crisis started to assess the effect on the working poor and to monitor the numbers involved? Please give details of such surveys or studies (their objectives, the approach adopted, the institution in charge, the main findings and so on).
No studies have been published specifically on the effects of the economic crisis on the working poor. However, conclusions may be drawn from the study entitled Enterprises in crisis: Effects and prospects in Greece and internationally (in Greek, (1Mb MS PPT file)), presented in July 2009 by the Foundation for Economic and Industrial Research (Ίδρυμα Οικονομικών και Βιομηχανικών Ερευνών, IOBE) within SEV. The study was conducted through a questionnaire between March and May 2009 on a sample of 587 companies (plcs and limited companies) employing a total of over 90,000 people.
Based on the study findings, the most likely manner of reacting to the economic crisis – according to 93% of the companies surveyed – is to cut operating costs. Some 86% of the enterprises cite cutting profit margins, 73% report reducing prices and 67% mention cutting back on production or business. The table below outlines the proportion of companies adopting various methods of reducing labour costs. For example, 59% of enterprises were dismissing unskilled workers and 54% of companies were freezing or only marginally increasing the regular pay of senior executives.
|For unskilled blue-collar or white-collar workers||For skilled blue-collar or white-collar workers||For senior executives|
|Cutting back on variable elements of labour costs (bonuses, productivity bonuses)||20||30||39|
|Adjusting working time (working time arrangements, cutbacks in overtime)||30||35||10|
|Reducing the number of employees||59||49||14|
|Freezing or only marginally increasing regular pay||33||49||54|
Source: OIBE, 3009
It thus emerges that unskilled workers, who comprise the group at higher risk of poverty, are in greater danger than the other categories of workers of losing their jobs. This is in fact observed in all sectors of the economy.
4.3 Have any policy measures been taken to reduce the possible effect of the recession on the working poor?
The Ministry of Employment and Social Protection (Υπουργείο Απασχόλησης και Κοινωνικής Προστασίας, YPAKP) recently announced – apart from the regular actions included in the Operational Programme ‘Human Resources Development 2007–2013’ – supplementary measures to address the effects of the economic crisis on the labour market. In April 2009, it presented an action plan to address the impact of the financial crisis on employment (GR0905079I). Most of these measures target unemployed people registered with the Labour Force Employment Organisation (Οργανισμοζ Απασχολησηζ Εργατικου Δυναμικου, OAED) and provide mainly for the implementation of subsidised vocational training and work experience programmes in the public and private sectors.
The measures that target low-paid workers include the following:
rent subsidies from the Workers’ Housing Organisation (Οργανισμός Εργατικής Κατοικίας, ΟΕΚ) for 120,000 beneficiaries. This provision has a total budget of €220 million;
interest-free loans from the OEK for 2,500 beneficiaries, including large families, people with disabilities and fire victims. This initiative has a total budget of €250 million;
support for young scientists, lawyers, engineers and doctors aged up to 34 years, by paying them a €15,000 subsidy. This programme covers 6,000 graduates and has a total budget of €90 million;
a training programme for employees in SMEs which have cut back on working hours, making use of the existing statutory framework, or for workers who have been laid off. This programme covers 8,000 workers and has a total budget of €50 million. It covers workers’ pay lost due to shorter working hours;
support for SMEs aimed at preserving jobs as well as enabling them to meet the new challenges and requirements caused by the international economic crisis. This programme covers 24,000 workers and has a total budget of €48 million. A necessary precondition for SMEs to be included in the programme is their commitment to maintain all jobs;
support based on an annual income for female employment, making it possible for 18,000 children to be cared for free of charge in crèches, day-care centres and creative activity centres. The total budget for this programme is €280 million. For the 2009–2010 school year, €62 million will be made available;
support for the ‘Home Help’ programme, targeted at working women for the care of elderly and dependent people. This programme covers 9,000 working women and has a total budget of €42 million.
To reduce poverty and income inequalities in Greece, public policies should aim to increase workers’ share in output, either directly through collective bargaining or at a secondary level through redistribution of resources by means of the tax system. Evasion of social security contribution payments needs to be curtailed, as well as precarious employment. Increased unemployment benefits are necessary and these should be granted for a longer time to more beneficiaries. In addition, the country should adopt some form of minimum guaranteed income, and strive towards better public health and education.
Ketsetzopoulou, M., ‘Working poor in Greece’, in Social portrait of Greece 2006, Athens, National Centre for Social Research, Institute of Social Policy, 2007 (GR0706039I).
Papatheodorou, C. (Scientific coordinator), Economic inequality and poverty in Greece: Comparative analysis and intertemporal trends, Athens, Observatory on poverty, income inequality and social exclusion (Παρατηρητήριο Φτώχειας, Εισοδημάτων, Ανισοτήτων και Κοινωνικού Αποκλεισμού, PAF-EAK), 2008 (in Greek (2.2 Mb zip file)).
Tsakloglou, P. (Scientific coordinator), Poverty in Greece today, Athens, PAF-EAK, 2008 (in Greek (1Mb PDF)).
Sofia Lampousaki, Labour Institute of Greek General Confederation of Labour (INE/GSEE)