Solving the Greek crisis – by making inequality worse?

James Wickham26/06/2015

James Wickham: It seems the Eurozone finance ministers - and behind them the IMF – are rejecting the last proposals from the Greek government. These proposals attempt to reverse the trend of the last years where the crisis has exacerbated inequality – and the poorest are asked to solve the crisis by accepting even further cuts in living standards.

In Greece the crisis has meant growing inequality in terms of disposable incomes.

In 2010-11 and 2011-12 the poorest 10% of households lost more in percentage terms than the richest 10% of households. There has been a dramatic fall in living standards of the poorest households. If the poverty threshold is taken at the pre-crisis 2007 level, then Greece has by far the biggest rise in poverty of all OECD countries (OECD 2014).

Much of the conflict in Brussels is over demands for reform of the pension system. Greek pensions are a mess and the widespread early retirements seem bizarre to the rest of us.

However, pensions have become important in the crisis because often they support whole families, including adult family members who are unemployed. The flip-side of extensive pensions is that unemployed people in Greece are less likely to be entitled to any form of income support than any other EU country. In 2009 precisely 12.4% of the unemployed received unemployment benefits (Gallie et al 2013: 24) but I’ve heard estimates as low as 8%.

In this situation a parent’s pension can be a crucial for many unemployed young people.

Gallie, Duncan (ed.) (2013). Economic Crisis, Quality of Work and Social Integration. Oxford UP.
OECD (2014), "Income Inequality Update - June 2014”

Professor James Wickham

James Wickham

James Wickham was Jean Monnet Professor of European Labour Market Studies and Professor in Sociology at Trinity College Dublin. He has published widely on employment, transport and migration in Ireland and Europe; he is the author of Gridlock: Dublin’s Transport Crisis and the Future of the City and co-author of New Mobilities in Europe: Polish Migration to Ireland post-2004.  His book Unequal Europe: Social divisions and social cohesion in an old continent analysed the collapse of the European Social Model; his new text book European Societies (Routledge 2020) examines the structures of inequality in contemporary Europe.  He is a former director of TASC. 



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