LISTENING to President Anastasiades announcing the government’s plans on welfare benefits last Friday, the first question that sprang to anyone’s mind was ‘where would bankrupt state find the money’ to guarantee a minimum income for people in and out of work. The general message was that the jobless, pensioners, lowly-paid would be guaranteed a minimum amount of money from the state to be able to cover their basic living needs.
Yesterday the labour minister Zeta Emilianidou made things clearer as she explained that the government would undertake a radical reform of welfare benefits, as part of its obligations under the Memorandum of Understanding signed earlier this year. There would be no additional spending by the state, as the budget amount for welfare benefits would remain unchanged at €2.8 billion per year, said Ms Emilianidou, explaining that the government’s objective was rationalisation of the system through more effective targeting of payments.
Under the current system, the minister said, there were people who were collecting monthly benefits of between €2,500 and €3,000. The new system would put an end to these abuses by introducing means-testing for every applicant for benefits and introducing strict income criteria. The cornerstone of the new policy would be what the minister called the ‘Guaranteed Minimum Income’ which, in effect, would be a safety net for all citizens.
The government should be congratulated for undertaking the radical reform of the welfare system as it cannot cater for the changing needs of society. Under the current system, unemployment benefit is paid for only six months, as it was based on the assumption of full employment conditions, which no longer exist. Long-term unemployment is now a feature of the economy and the state needs to offer support to people that cannot find work. The millions spent on housing loans for second generation refugees, without any means-testing, would have to stop and the money used to support those in genuine need.
The government hopes to reform the system within a year which appears rather optimistic given the amount of work that needs to be done, from creating data-bases, setting criteria, means-testing all applicants, doing the number-crunching and setting the ‘Guaranteed Minimum Income’. Should we also mention the political fall-out that the reforms are bound to cause, as there will be groups of the population that would lose out? This, after all, will be a zero-sum game but it is the only way forward.
Cyprus desperately needs a rationalised, welfare system that caters for the changing needs of our society and the government’s initiative, even if it is an obligation under the MoU, should be welcomed.