POLICY ANALYSIS RESEARCH UNIT

Department of International and European Economic Studies
Athens University of Economics and Business



Newsletter 1/2012

Poverty amidst the crisis in Greece
By Manos Matsaganis, Chrysa Leventi & Eleni Kanavitsa

In this Newsletter we present our recent findings on poverty in Greece under current conditions of deep and prolonged recession. We use the European tax-benefit model EUROMOD to monitor how the income distribution has evolved in recent years, in the absence of timely official statistics. We find that the number of persons living in households with income below the standard poverty threshold (60% of median) has not changed much: it has fluctuated around 19% of population. However, if we apply a fixed poverty threshold (60% of the 2009 median in real terms), we find that the proportion of those who would have been considered poor before the crisis has now risen sharply to over 35%. Moreover, we have set an extreme poverty threshold, equal to the cost of a basket of goods limited to basic necessities; we have estimated that the proportion of population living in extreme poverty (because unable to purchase the basic basket of goods) is as high as 8.5%. Finally, our results confirm that poverty rates are significantly higher than average for children, and dramatically high for unemployed workers (of whom less than 17% received unemployment benefit). Given that huge gaps in coverage remain a key feature of the social safety net in Greece, the sharp rise in unemployment (to around 25%) threatens to drag entire families into poverty. We argue that this is the 'new social question' of our times. Dealing effectively with it, in today's adverse conditions, will require a radical shift in policy and a fundamental re-think of priorities.

The full text of the Newsletter is available here (in Greek).