LSE Blog: Uncovering the profound effects that pension and health care reforms have had in post-crisis Greece

In a recent study, I examine the content of the reform measures in the pension and health sectors in Greece in the post-crisis period in terms of their content and their future impact on the architecture of both systems. While the Troika has been associated with severe retrenchment, it is also true that both the pension and health systems were faced with significant sustainability, adequacy and modernisation challenges well before the crisis and the advent of the Troika. In relation to financial sustainability, the European Commission’s projections published in 2009 showing a doubling of expenditure between 2007 and 2060 were already a cause for alarm, even though this was ignored by the conservative government of that period.  [...]

Significant retrenchment has therefore been a core feature of the fiscal consolidation effort and one which has attracted popular attention. In the pension sector, the introduction of significant cuts has led to an estimated reduction of pension benefits for current pensioners of close to 50 per cent in certain cases. Pension benefits for future pensioners are equally expected to be half the amount of current ones as a result of new mechanisms for the calculation of benefits. In the health sector, significant cuts and cost-containment has taken precedence over other concerns regarding the quality of services or ensuring universal access. [...]

Overall, the reforms have led to the gradual erosion of the public character of both systems and a shift towards residualism, a process with profound effects on the future character of the Greek welfare state. While this shift to residualism seems to confirm the popular belief that associates the advent of the Troika with the imposition of austerity, recent evidence from the Irish case shows a different picture, with the national government being allowed more room for manoeuvre. The Irish experience raises questions regarding the extent to which the Greek government could have pursued a different strategy, taking into consideration not only financial sustainability concerns, but also those associated with (among others) adequacy and efficiency.  

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