While the whole world is going forwards, Greece is going backwards. In the year 2013, Greek workers will experience a miracle. Their salaries, sharply cut in the era of loan agreements, will reach – or better say: return – to the levels of 2001! This has been predicted in the monetary report of the Bank of Greece.
“With regard to 2013, during which many collective agreements will end (and they will probably adjusted downwards in the earnings) it is possible that the average nominal wages will fall by 7% in the total economy (about 3% in the public sector and almost 9% in the business sector). The result will be that the labor cost per unit will be further reduced by 6% -6.5% in the total economy and about 8% in the business sector.”
What does this practically mean? It means, that the reduction in labor costs per produced unit will reach 11.8% -12.6% in the total economy and 15.2% -16.3% in the business sector for the years 2012-2013.
The Memorandum of Understanding, the loan agreement between Greece and its lenders for the second bailout, had predicted a decline of 15% for the years 2012-2014!
Result: In 2013 Greeks will earn so much as in 2001 – And in 2014, so much as in 1997?
PS All I can say is : Fasten your seat belts and do not smoke! It’s expensive and you need to save money for the hard times to come.
Well, while it should be understandable that at least a part of the income gains of the bubble years has to be taken back, the government should make up for that with programs to help the lower and medium income housholds. But what’s actually happening is the oppposite. It’s the 99% who have to bear the highest burden of the tax increases (because it’s simply much easier to tax their paychecques), while the 1% manage to move their money away from the reach of the tax collectors. And certainly a big part of the increases land in the pockets of corrupt officials, too. This socially unfair way of balancing the budget has a desastrous impact on domestic demand (see the incredibly shrinking GDP) and has to be changed asap!
what a proposal! whereas the government can only take from the lower and medium incomes lol
Thx! Hmm, what do you think, maybe I should run for office in Greece with that program? Imho it compares favorably to the brouhaha of the other polticians!
😀
what program? ccolecting taxes from the big money?
Hey, that sure makes more sense than collecting taxes from small money!
😀
and yet, the state behaves ‘senseless’ …
Ktg, this may interest you:
“There is an Alternative! How Spain could pursue expansionary Policies: by Vicente Navarro”
http://www.social-europe.eu/2012/02/there-is-an-alternative-how-spain-could-pursue-expansionary-policies/
I guess there have to be similar alternatives for Greece, too. Any party that puts them together in a program should have a huge advantage over their “no clues, no answers” competitors. When will the first one wake up?
OK, that’s not good. But what about this headline this morning in The Netherlands?
This is my own translation of this story http://www.rtl.nl/(/actueel/rtlnieuws/economie/)/components/actueel/rtlnieuws/2012/03_maart/20/economie/portemonnee_tien_jaar_terug_in_de_tijd.xml
“what about this headline this morning in The Netherlands?” I would say they use KTG blog for their titles!!! But seriously now: considering the negative economic news coming from there, you think Netherlands would need any bailout?
No, I don’t think there is any need. Even the fact that they would have a bigger deficit this year than 3% should not be a real problem. Because the main problem is the scaremongering that came and still comes out of their government right now. That has scared most of the consumers into thinking that their pensions and income are not secure. Not now, not in the future.
At the same time The Netherlands has a trade surplus of 60% or so. Most pensionfunds have the future claims covered for around 100% or higher. The huge natural gas exports bring in tons of money and even more now with the high oil-prices (they are linked). There is enough money and potential to earn even more.
No the whole thing is the total lack of consumer trust. And this is, like I said, totally created by politicians who were preaching austerity for the sake of austerity… Just to look tough. Not only to the outside world but mainly to their own voters. Tough on foreigners, tough on Greeks, tough on spending, tough on muslims, tough on everything.
One nice example are the cut in pensions that are taking place now. They were a HUGE slap in the face of confidence for the Dutch public. But it HAD to be done, because the pension funds were running out of money… Eh, not really. There was a arbitrary rule that stated that pension funds need to have 105% of their future claims covered. Crazy rule, introduced in 2008(?). And some of the funds were getting below that point. Couldn’t they pay out pensions. Of course they could. But is was a nice political point to get into a neo-liberal/conservative austerity mode.
Other example is about contract work. There are no jobs for live. But something has changed. It used to be that if after one or two temporary contracts the job still existed you would get a permanent contract. You could get fired from that, but it was more difficult and you had more rights. That seems to have changed now. In 2010 80.000 people got a permanent work contract. In 2011 that was just 2000!!! That was shattering to read.
And now, because of lack of spending by the public the budget is derailing. This governmental economic advise organisation (CPB) is warning the government not to put up VAT, because that will strangle the consumer spending even more. But, as I understand it, the coalition has some political/ideology point to make and will probably go for that.
And the solutions are so simple, but no one dares to go for them…
So, the situation is totally different from Greece. And at the same time so very familiar… 🙁
thanks for the nice report.