Within the letter sent by Greek finance minister Yanis Varoufakis to the European Commission, the ECB and the IMF last night (allegedly 45 minutes before the government’s Monday deadline) – there was one key line that could radically transform the country’s social welfare system.
The proposals, which have now reportedly been accepted by the Eurogroup and passed on to national governments to vote on Greece’s bailout extension, contained a number of anticipated measures — including clamping down on tax avoidance and improving tax collection. But they also had one proposal that demonstrated a little more out-of-the-box thinking.
Here it is:
That may seem a fairly technical passage, but it speaks to one of the key debates about the future of welfare policies across the developed world. Greece is trying to provide a situation in which people, between the ages of 50-65, can remain attached to the job market even during (potentially extended) periods of joblessness.
The solution? A Basic Income.
Here’s how it works. A basic income is a payment from that state that is granted to individual citizens, without means testing or having a work requirement. To its supporters it is a way of providing a basic standard of living to all citizens in a non-bureaucratic and direct fashion.
The concept is to replace the convoluted welfare systems that have been built up incrementally over decades with a simple monthly payment straight into people’s accounts. In a country that is suffering from high unemployment and a significant shortfall in domestic demand as a consequence, such a scheme could (in theory) offer a backstop for Greek demand. It would provide individuals with the confidence of a future income and alleviate part of the “humanitarian crisis” currently being suffered in Greece.
As the letter states, one of the key planks of the Syriza-led government’s plans to address the humanitarian crisis in the country is to “evaluate the pilot Minimum Guaranteed Income scheme with a view to extending it nationwide”.
It wouldn’t be the first country to flirt with such an idea. Last year Cyprus passed a new law giving low income families a Guaranteed Minimum Income of €480 a month following its own economic crisis — although the system has been beset by technical problems. Elsewhere, a more ambitious grass-roots movement in Switzerland calling for a 2,500 Swiss francs (£1,700) per month from the state received over 100,000 signatures needed to forced a referendum on the proposal.
It is, at its core, about a redefinition of the conception that was prevalent at the inception of the modern welfare state that the point of welfare payments were to keep people “fit for work”. That may have been an appropriate moniker for its time, but modern societies have developed different expectations for the quality of life that its citizens should enjoy.
Just being fit enough to get into work doesn’t cut it anymore.
In the case of Greece it looks like such a scheme would initially be targeted at those nearing pension age in order to prevent them from taking early retirement — providing them with an income that they would otherwise draw from the state pension fund.
This may be a small step in terms of what supporters of a basic income hope to achieve, but it could be another important move in bringing the concept into mainstream discussion.
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