Abstract: This qualitative, interpretive case study examines the psychological and relational dimensions of the Minimum Guaranteed Income (MGI) "implementation paradox" in Volos, Greece. Directing focus to institutional trust, stigmatization, and psychosocial coping, sixteen semi-structured interviews (n=16) were conducted with frontline welfare workers (n=8) and intersectionally vulnerable beneficiaries (n=8, including single mothers, Roma, migrants, and long-term unemployed individuals). Using Braun and Clarke’s thematic analysis, findings reveal that while MGI acts as an indispensable material survival floor, it fails to cultivate psychological autonomy or long-term empowerment. Bureaucratic saturation transforms social workers into "compliance officers," inducing occupational stress that blocks empathetic care. Concurrently, beneficiaries experience hyper-procedural interactions as social stigmatization, eroding institutional trust, the essential psychological foundation for social intervention. Furthermore, mandatory "work-first" activation plans operate as empty "procedural shells" that ignore recipients' depleted psychological bandwidth and chronic stress. The study concludes that procedural welfare delivery degrades relational dynamics; sustainable reform requires shifting from administrative compliance to relational casework that prioritizes trust-building and psychosocial stabilization as prerequisites for social inclusion.