Cyprus Mail

President pledges a ‘Guaranteed Minimum Income’ UPDATED

President announcing reforms on Friday

By Stefanos Evripidou

PRESIDENT NICOS Anastasiades yesterday announced the complete reform of social policy based on the principle of securing a Guaranteed Minimum Income for all citizens, financed in large part by eliminating non-targeted allowances.

The general principle of this new “revolutionary reform”, as he called it, is to guarantee that all citizens have an income sufficient to live on, provided they meet certain conditions.

The reform will see the rationalisation of state expenditure on social welfare should be fully in place by June 2014 with the troika’s blessing, he said.

“Beneficiaries will be all of our fellow citizens who have an income below that which can assure them a dignified living, irrespective of age, class or professional situation,” Anastasiades said.

The level of the Guaranteed Minimum Income would take into consideration the needs of every citizen and every household concerning nutrition, clothing, consumption of electricity and other indispensable items.

At the same time, it will guarantee the right for housing of the economically weaker groups of the population, he said. This will be done either through subsidising rent if the beneficiaries don’t own their own residence, or through subsidising the interest on housing loans in cases where people own a house but face problems in paying instalments.

“Also covered will be unforeseen expenses, which unfortunately come up in every household, such as, for example, absolutely necessary construction and repairs to houses, municipal taxes, etc,” he said.

“What I want to stress emphatically is that the Guaranteed Minimum Income will also be provided to thousands of our fellow citizens who, in spite of their needs, are not covered to this day by the existing system and did not receive any substantial assistance from the state,” the president said.

These would include unemployed graduates of schools and universities, working people with particularly low earnings will have their income supplemented to reach the Guaranteed Minimum Income, and the self-employed, who have found themselves out of work and who, until now were not covered.

According to Eurostat, unemployment in Cyprus reached 16.3 per cent in May 2013 compared to 15.8 per cent in April 2013.

“Many of the pensioners with low pensions, without adequate contributions to the Social Insurance Fund, will also receive higher payments than they receive today,” said Anastasiades.

He said the general principle of the plan was for every citizen to be “guaranteed the minimum needs for a dignified living in a European country”.

The Guaranteed Minimum Income will replace the benefits system, but will also be financed by a large number of allowances and benefits that until now have been distributed somewhat arbitrarily by different ministries and services of the state.

“The policy of non-targeted and scattered allowance is terminated,” Anastasiades said.

“A policy which, in spite of  significantly burdening public finances and taxpaying citizens, did not manage to reduce the inequalities and often ignored fellow citizens who are truly in need.”

The new policy of social welfare will from now be concentrated under the same authority – in other words, there will be a merging of services that until today were giving out subsidies, mainly from the ministries of labour, finance, interior and education.

Student allowances will continue to remain the purview of the Education Ministry, however.

The president said the level of the Guaranteed Minimum Income would be determined in an objective and scientific way by the Statistical Services, with the International Labour Office having a significant advisory role.

Regarding unemployment allowance, the new policy provides for the continuation of unemployment benefits at current levels and for six months.

“For the first time, however, with the introduction of the new system, our fellow citizens who continue to be unemployed will be able to continue to live with dignity, since they will be receiving the Guaranteed Minimum Income,” Anastasiades added.

“The single but absolutely necessary precondition is that they do not refuse offers of employment and participate in the policies of active employment determined by the state,” he said.

These programmes entail opportunities for education, vocational training and subsidised employment, mainly financed by the European Social Fund.

Beyond the Guaranteed Minimum Income, unemployment benefits, and active employment policies, the new social welfare policy will be supplemented through separate allowances concerning other groups of the population with certifiable needs, such as, for example, paraplegics and children with special needs.

Anastasiades noted that the government’s proposal “for a modern conceptualisation of the policy on social welfare and prosperity” was prepared in consultation with the troika.

He said dialogue with stakeholders would begin immediately for implementation of the new system by June 2014.

He added that “with the improvement of the economic situation of our homeland, in essence, the entire programme will be self-financed, taking into consideration the contribution of the EU Social Fund.”

Asked about the overall cost of the programme, Anastasiades said the state will keep social spending in 2014 and 2015 at the same levels. The state spends on average €2.8 billion on social policy each year, he noted.

“So, there will not be any deviation from the cost of implementing social policy.”

What the government wants to revolutionise is the way social benefits are distributed by putting them on a rational basis which addresses the needs of every citizen, “whether it concerns a pensioner, large families, a disabled person, or child with special needs, so that we are a state that is actually providing the safety net of protection that every citizen needs”.

According to a government source, the Guaranteed Minimum Income will be calculated taking into account the cost of the average basket of household items.

Those considered eligible for this help will lose the right if they come into possession of assets, deposits, property etc which takes them above the minimum income needed to live a dignified life.

The labour ministry will be responsible for people’s income assessments using digitalised information on each applicant obtained through the exchange of information between all relevant ministries.

Labour Minister Zeta Emilianidou will hold a press conference on Monday to provide further details on the “revolutionary reform” of the welfare state.

AKEL’s Christos Christofides yesterday slammed the government for not entering into a “social dialogue” with stakeholders and the opposition party before taking a decision on sweeping changes in the distribution of social welfare.

Coalition partners DISY, DIKO and EVROKO welcomed the announcement.

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