GREECE: Government to roll out a Guaranteed Minimum Income scheme

GREECE: Government to roll out a Guaranteed Minimum Income scheme

The new bailout agreement between Greece and international creditors includes plans for a national roll-out of a Guaranteed Minimum Income (GMI).[i] The GMI is not an unconditional basic income for all citizens, but would be the first universal means-tested grant that covers all Greeks below a certain level of income and asset ownership, regardless of employment status, job contract type, professional category, gender or age.

Alexis Tsipras 2013.jpg

Alexis Tsipras

In the latest round of bailout negotiations, Greek Prime Minister Tsipras reportedly opposed the introduction of the GMI. The final memorandum approved by the Greek parliament last week, however, provides for a national roll-out of the GMI by end of 2016. The government needs to find 0.5% of GDP to finance the national GMI scheme. A draft report from the World Bank published in January this year, provides a core scenario where 1.2 million people would be covered by the GMI – this is constructed on the basic qualifying criteria and payment amounts of a GMI pilot started last year. The measure would cost €980 million or 0.54% of GDP.[ii]

The general wording of the bailout agreement remains vague and the GMI has not yet been approved by parliament. The specifics of implementation will only be known in the next months.

Recent political events are another source of uncertainty. Tsipras resigned on Thursday and called for snap elections, following a rebellion by those opposed to the bailout within the ranks of his party, Syriza. The elections are expected to be held at the end of September. The rebels have formed a new left group which will run under the banner of Popular Unity.

This casts some doubts over the stability of the next government, and might have implications for the bailout implementation. Sources close to the majority line in Syriza stress that, despite the harsh bailout measures, any future government led by Tsipras would be committed to a social agenda that prioritises those who are in most need.

The history of the GMI in Greece

Attempts to introduce a GMI as a basic social safety net for the most vulnerable sectors of society have been made before. In 2000, the centre-left government led by Pasok assessed and then rejected a proposal in favour of this option. Syriza also tabled a legislative proposal to institute a GMI in 2005, without success. In recent times, the GMI has rarely appeared in policy debates, encountering resistance from many quarters. Trade unions and left-wing critics see the GMI as a threat to well established social protection mechanisms for unionised workers, pensioners and their families. From the right, a pro-poor agenda struggled to gain any prominence until the recent economic crisis brought about by the austerity measures of previous bailouts.[iii]

Economist Manos Matsaganis in Greece

Economist Manos Matsaganis in Greece

The previous coalition government, led by the centre-right party New Democracy in alliance with centre-left Pasok, feebly endorsed a GMI and launched a pilot in November 2014, engineered by the World Bank. The pilot was to be implemented in 13 municipalities across Greece. It’s too early to make final conclusions about it – the new bailout agreement includes provisions for an evaluation of the pilot to be carried out. In a recent academic paper, Matteo Jessoula, Manos Matsaganis and Marcello Natili suggest that there were problems, with little support from central government to the chosen municipalities, and limited capacity from local governments to deliver, resulting in haphazard implementation.[iv] The GMI amount was set at €200 per month for a single person. In a couple, the other spouse was entitled to an additional €100. The monthly sum was increased by €100 for each additional adult dependent and €50 for each minor child. The cash payments would cover the difference between the guaranteed amount and the household’s assessed resources. A couple with two children would fetch up to €400 per month. The GMI also had non-monetary components, including heating allowance, food stamps, and subsidised employment and training programmes.[v]

By the time the GMI pilot was launched, it was strongly opposed by Syriza. Many saw it as a measure instigated by the creditors to justify major cuts in other welfare measures and substantial reductions in wages, while introducing an income floor well below decent living standards. Observers note that the GMI debate rarely hit the spotlight, on either side of the political spectrum, and has been mostly confined to technical discussions among policy experts.

Towards a basic income?

Is the GMI then irrelevant to basic income discussions? Economist Manos Matsaganis, basic income advocate and a pioneer of Greek GMI policy proposals, is not optimistic: “Nobody is really discussing this at the moment, either within Syriza or outside. In any case, calling for the introduction of a basic income in Greece under current conditions would not be right. You cannot have a basic income before having a GMI, especially when fiscal constraints are so severe”. Social policy expert Varvara Lalioti is more positive: “There are a number of obstacles to the implementation of GMI, not least the current government’s political scepticism and problems with delivery. A national roll-out of the GMI would be a step in the right direction”.

Syriza demonstration

Syriza demonstration

The controversies around the GMI are symptomatic of the kind of resistance that might be encountered against basic income as well. The key issue seems to be the implementation of a universal mechanism that would substitute to some degree the redistribution of public funds through specific interest groups – for instance workers protected by unions or retired people receiving contributory pensions.

Critics point out that the GMI might constitute a race to the bottom pushed by creditors in order to reduce labour costs and state liabilities. GMI supporters like Varvara Lalioti note that, while government scepticism might be justified, “the GMI would protect those who have no social safety net and no organisations to speak on their behalf. They are among those who have borne the worst effects of the crisis”.

The controversies will no doubt continue in the next months. Basic income activists note that what the GMI might do is put in place the bureaucratic infrastructure needed to deliver a basic income set well above poverty levels. Reflecting the experience of other southern European countries, the Greek welfare state evolved piece-meal and reflects a complex constellation of interest groups. The introduction of a measure that covers people with little or no income from formal labour markets, and who have never worked under job contracts offering significant welfare benefits, is a significant change. It is likely to have important implications for the future of basic income discussions in Greece.

The article benefited from the expert advice of Dr Varvara Lalioti, Professor Manos Matsaganis and Professor Neni Panourgia. Errors are the sole responsibility of the author.

[i] The Memorandum of Understanding underpinning the bailout agreement.

[ii] World Bank. 2015. Ex ante poverty and fiscal evaluation of a guaranteed minimum income programme in Greece. Washington, D.C.: World Bank Group.

[iii] A detailed account of the different positions and criticisms in the Greek GMI debate is offered by Varvara Lalioti’s academic article “The curious case of the Guaranteed Minimum Income (GMI): highlighting Greek ‘exceptionalism’ in a southern European context”, forthcoming in the Journal of European Social Policy. An earlier version is available online here.

[iv] Matteo Jessoula, Manos Matsaganis and Marcello Natili. 2015. “Strengthening minimum protection in southern and eastern Europe? Pressures from within and from beyond”. 22nd International Conference of Europeanists, Paris, 8 July. Abstract available.

[v] Hellenic Parliament – Parliamentary Budget Office. 2014. Minimum Income Schemes in European Union and Greece: a Comparative Analysis.

Greece budget proposal 2015


This budget does not take into account the debt problem. The author thinks that the only realistic way out of the crisis is to give a debt moratorium of 5 years and discuss that topic 3 years from now.

The depth of the Greek crisis is an opportunity to depart from the classical views regarding the organisation of a state, dating back to the 1950’s, to implement a system taking into account the two recent and biggest revolutions in mankind:

  1. the human brain aid (computers, pda ..) replacing in part the brain power of humans, like motors did replace the muscles of Man and horses 200 years ago.
  2. The word wide free and fast communication network.

Today, only 8% of the population is needed to produce everything: food, industrial products and buildings. The model of the fifties is “job-centric”. The model presented here is the model of 2015: it is based on distribution of purchasing power. Jobs will follow the purchasing power (the current doctrine is that we should create jobs to generate purchasing power), for those who are still thinking in terms of jobs.

Greece, like many other countries, has a long history leading to 2015, the age were machines largely replace man to produce goods. Any citizen has the right to benefit from the heritage of his country, which is now capable to produce all goods we need with just 8% of the population.

We have created a huge social capital. Every citizen should get a dividend from that capital. We call it the social dividend or “basic income”, an income where we don’t need to work for, just like rich people live from their heritage. All citizens get this social dividend. Some part in cash, some part in kind. The amount in cash depends on their age (see table in the budget).

The amount in kind is given in education checks, healthcare checks and “coaching” checks. Citizens choose their education, healthcare and coaching service provider who gets money from this “social dividend in kind” fund within the state budget.

Both education and healthcare will see drastic changes the coming years, due to aforementioned massive global revolutions. The country will witness an unprecedented increase in education and healthcare – entrepreneurs.

Those services may even attract customers from abroad.

Every citizen will have the right to be “coached”, which will help all citizens to address problems and opportunities in their lives. This coaching system will hugely reduce criminality and improve productivity.

Since working people will get a social dividend of 350 € per month, somebody earning 1100 € net now would have the same total income if he/she gets a net salary of 750 €. The basic income system makes labour less expensive for the employer, the employer being public or private.

That is why the in the budget figures, the cost for public servants, but also for education and healthcare looks so low: a part of their salary is paid, so to speak, by the social dividend.

social security social dividend : basic income
age cash cheques total number cash dividend coaching
€ pp pm € pp pm € pp pm billion €/year billion €/y billion €/y
0-17 75 50 125 2270000 2.0 1.4
18-25 250 50 300 1180000 3.5 0.7
26-60 350 50 400 5130000 21.5 3.1
61-67 400 50 450 1020000 4.9 0.6
68 + 500 50 550 1400000 8.4 0.8
11000000 40.4 6.6 47.0
public service employees (remuneration on top of social dividend)
net € pp pm billion €/y
salary soc divid. total budget
national 1050 350 1400 100000 1.260
local 800 350 1150 100000 0.960
army 1050 350 1400 1000 0.013
police + 900 350 1250 100000 1.080
justice 1050 350 1400 10000 0.126 3.4
Public investments and current purchases 16
Total public expenditure except loan repayments 66.5


Obviously, some assumptions have been made regarding numbers of people kept in public service and the reorganisation of public services relating to security (police, army, ..) which could be looked at in a different way. Education, healthcare and coaching are paid by the government through the social dividend in kind. The demand side remains “public” and fully subsidised. The “offer”–side becomes, to some extent, market driven. The cost is only 6.6 billion because a significant part of the cost of these salaries is paid through the basic income grant to the people working in those branches.


subsidised by social security cheques
education 800 500 1300 240000 2.304
healthcare 800 500 1300 240000 2.304
coaching 800 500 1300 200000 1.920 6.5

On the public income side, VAT is increased to 30% and collected better to move it from 14 to 24 billion €. Other consumption tax is increased from 10.7 to 15 billion € mainly by increasing prices for fuel and a new consumer tax on electricity of 10 eurocent per kwh should bring 4 billion €. Social security contributions are abolished. Payroll tax will be levied only above a net income -including basic income- of 1150 € per month . It is expected that the majority of the employees will not pay payroll taxes anymore. However, anything earned above that threshold will be taxed at 50%. We expect this tax to generate 14.4 billion €. Corporate income tax is replaced by corporate eco-tax. This is a tax on energy consumption mainly, but not exclusively. Taxes on property should generate more and a tax on financial transactions should bring another 1.5 billion €

Consumption billion €/y
   VAT 23 14
   Other 15 10.7
   tax on electricity 4
   sociial security levy 0 22
   personal income 14.4 13.5
   Corporate income 0 2.2
   Corporate ecotax 4
   Property 5 3.7
   Financial transaction taxes 1.5
Total 66.9 66.1


GREECE: Tomas Hirst, “The Greek government is calling for a radical new ‘basic income’ welfare policy”

SUMMARY: This article discusses a welfare policy proposed by the Greek government that would create a basic income for people between the ages of 50-65 during periods of joblessness. The proposed policy was included as an option in a letter sent by the country’s Finance Minister to the European Commission. The article then discusses the concept of basic income more generally and the basic income initiatives that have occurred in other countries.

Tomas Hirst, “The Greek government is calling for a radical new ‘basic income’ welfare policyBusiness Insider. February 24, 2015

GREECE: Is Syriza about to implement a basic income?

GREECE: Is Syriza about to implement a basic income?

By including a paragraph mentioning “basic income” in a letter to the ministers of the eurozone, SYRIZA’s government seems to be looking forward to examining the possible implementation of a national basic income scheme. But the details of the scheme remain completely unknown for the moment.

Last wednesday, Greek Finance Minister Yanis Varoufakis sent a letter to all the finance ministers of the euro zone including a list of reforms the Syriza government commits to implement, in an attempt to get an extension of the bailout program the country is currently bound to.

The very expected list of reforms sent last wednesday includes a very ambiguous paragraph mentioning the concept of a guaranteed basic income:

Establish a closer link between pension contributions and income, streamline benefits, strengthen incentives to declare paid work, and provide targeted assistance to employees between 50 and 65, including through a Guaranteed Basic Income scheme, so as to eliminate the social and political pressure for early retirement which over-burdens the pension funds.

The sentence was immediately picked by Business Insider’s Tom Hirt who seems to be assuming that the Greek government is actually planning to implement a basic income “granted to individual citizens, without means testing or having a work requirement”.

While the article went viral on the internet, we still do not know what exactly the Greek finance minister had in mind when he included the term “Guaranteed Basic Income scheme” in the letter, especially as the sentence sends mixed feelings on whether the plan would include all the population or just a targeted age group, and if it would include conditions or not.

This would not be the first time the term ‘basic income’ has be confused with similar yet different ideas, such as the guaranteed minimum income which is usually understood as a means-tested scheme, attached to work requirement, rarely fully universal, and not granted individually – as opposed to BIEN’s definition of the basic income.

So far, Syriza has never publicly discussed or pushed for the idea of the universal basic income, although it did try to pass a legislative initiative in favour of a means-tested minimum income back in 2005 – unsuccessfuly. As a matter of fact, the idea of basic income does not seem to have spread so much among the party’s membership.

Noteworthily, Greece is one of the few EU countries which do not have yet a guaranteed income scheme.

In november 2014, minimum income pilots projects were started in Greece. It concerns 13 municipalities all over greece, in which 7% of the population of each municipality was selected with criteria (income and unemployment).

Those programs are part of the memorandum of understanding between the Greek government and the so-called Troika (IMF, ECB, and the EU Commission) in an attempt to push Greece towards the implementation of a minimum income.

Interestingly, Greece’s letter to the EU also promises to “Evaluate the pilot Minimum Guaranteed Income scheme with a view to extending it nationwide.” However, the newly elected minister of labor Panos Skourletis has already put on hold the pilots, soon after taking his new position.

While the current political situation in Greece might turn out as an opportunity for basic income, there was no big win just yet. We will look forward to get more information from the actual intentions of the new government.

Credit picture CC Asteris Masouras