Austerity and poverty in Greece: more that meets the eye





Eurostat published its estimates of at-risk-of-poverty individuals in the member states in 2011, to a substantial media reception in Greece and elsewhere.

Perhaps less attention has been paid to the figures published more recently on material deprivation (as measured by Eurostat’s SILC survey) in 2011. No surprise really, as ‘poverty’ is a word that makes headlines while ‘material deprivation’ is hard to translate and sounds rather technical.

In fact it’s the other way around; poverty is measured using a technical and rather arbitrary definition, while material deprivation is measured by individuals’ responses to simple questions such as ‘can you afford to buy meat twice a week/go on holiday/keep your house warm?’ If journalists only realised this, this far more dramatic dataset would be their number one hunting ground.

The new figures suggest that material deprivation in Greece went up in 2011, regardless of what dimension of deprivation is considered.  The ones I’ve been looking at the longest are: ‘Inability to keep home adequately warm’ (data here), ‘Inability to afford meat, chicken, fish or vegetarian equivalent every second day.’ (data here) and ‘Arrears ([unpaid] mortgage or rent, utility bills or hire purchase)’  (data here).

I started looking at the data one year ago in response to persistent reports of Greek children fainting at school due to malnutrition. While the first and most famous of these reports was an over-generalisation in lieu of lobbying by the Greek teachers’ union, many have followed and it’s safe to say that malnutrition is a fact of life for many of my compatriots, many of those with children. Besides, by the time the children in a household are having to go without food, one can be certain the adults have already been going without for a while.

The tables in this post demonstrate the percentage of households dealing with each of the above facets of material deprivation. Worst off as you might have guessed are single parent families, families with more than two children, and people living on their own, especially older people.

To return to the issue of food poverty, just under one in nine households with children are finding it hard to feed properly, twice as many as in 2007 and the highest percentage since this question was introduced in 2003. I say ‘feed properly’ because it’s not 100% clear what falls under not being able to afford a ‘vegetarian equivalent’ twice a week.

As @irategreek pointed out to me over Twitter, this is interpreted by humanitarian aid agencies as including pulses. In a Greek context, not being able to afford these twice a week is really at the margins of extreme poverty. It’s still not the Argentine 6 peso diet, but a good measure of what most people would think of as really struggling to get by.

Using food deprivation as the main indicator, it turns out that 2005 was when the Greeks lived best, a finding that matches my estimates elsewhere. In fact, the drop in food poverty levels in the immediate aftermath of Euro adoption (and despite the reports and reality of persistent inflation) was spectacular.

By way of a caveat I should say that respondents to such surveys may be embarrassed to tell researchers that they’re not able to afford certain things, especially if they have children, so the SILC estimates are almost certainly under-estimates. Still, large surveys such as SILC ask a whole bunch of questions and are not at all focused on poverty indicators, so people going hungry will not necessarily tend to opt out altogether. Moreover, I think it’s safe to assume that the tendency to lie about living in poverty is not greater in Greece than elsewhere and has not become greater over time (in fact, in hard times people may be more willing to discuss such problems openly).

It turns out Estonia, Malta and the Czech Republic are countries with similar levels of food poverty as Greece’s among households with dependent children, and this grouping holds when it comes to large families with children. When it comes to single parents, on the other hand, we’re stuck somewhere between Poland and Romania.

Remember, the Czech Republic is, to me, the best-case scenario of where Greece will end up. The worst case is Latvia, where 29.6% of households with dependent children live in food poverty – almost three times as many as in Greece.

Now hunger is one area where libertarians are challenged strongly by other creeds: presumably libertarians are OK with this and think we should allow people–worse, children–to go hungry.

My answer is ‘no’, but for a given value of ‘we’. Using the word ‘we’ to denote the State is, after all, a sly rhetorical tactic that has gradually injected our discourse with statism. ‘We’, as in society, must not allow people to go hungry, least of all children. The State could have a role in protecting life and property, countering negative externalities and subsidising positive ones (health, education, public infrastructures) but beyond that point it should leave poverty to the real ‘we.’

Not that Greece’s anti-poverty policies were ever good to begin with. According to the latest data, and the older data too, Greece’s welfare state has for years been the worst in the OECD at tackling poverty–in terms of how much it manages to reduce the risk of poverty per Euro spent.  But the latest study is much more damning of the project throughout Europe: it takes the more ‘efficient’ EU countries on average 5 times their per capita GDP per year to lift or keep a single person out of poverty, and this multiple is on the rise.

This is amazing as it’s many times over the sustained income that would be required for the same person to no longer be poor. The countries making the most out of their anti-poverty money are, amazingly, Hungary; Slovakia; Bulgaria; Czech Republic; and Poland.

There’s a simple reason for this. The welfare state may focus its planning on poor people, but its intermediate output almost always tends to be middle-class jobs ‘managing’ the poverty agenda in a self-serving manner. And since the middle class is better at lobbying than the poor, they also manage to skim many of the system’s transfers for themselves.

All of this is a simple, well known feature of bureaucracies everywhere; we just happen to have become better at it. It’s also a constant refrain in the TPA’s non-job of the week column, a Greek equivalent of which would make the world a better and funnier place–if any public sector job ever came with a job description.

If you want to know more about the amazing SILC survey, check out this gem I’ve got for you, right from the vaults of the Eurocracy.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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