A study conducted by the Labor Institute of Greece’s biggest private sector union GSEE highlights the dramatic deterioration of the living stands of Greeks due to the austerity policies of the last 5 years, that is ever since the country sought its financial ‘rescue’ from the International Monetary fund. Analyzing the factors that have trapped Greece in a vicious cycle of fiscal consolidation and additional loans, the study concludes that the programs that were aimed to help Greece have been using false recipes and push the country into a permanent debt and economic crisis.
In the last 5 years of bailouts and austerity programs, the purchasing power dropped by 25%, unemployment is especially high among high school graduates, 7 out of 10 laborers have part-time jobs in terms of salaries, while they work full day, minimum wage is down to the same level as in Poland, the study found.
The most striking findings are:
1) the purchasing power of real minimum wage in the period 2010-2014 decreased by 24.9% and 34.5% for youth under 25.
2) Greece’s position in the ranking of countries with a statutory minimum wage slumped from seventh to tenth place (or in the eleventh after the introduction of the minimum wage in Germany since 2015). It is lower than the corresponding minimum wage in Spain, Malta and Slovenia, at a corresponding level to the minimum wage in Poland.
3) part-time employment has flooded the market to 70%. This means that there are no full-time jobs or that workers hit by unemployment prefer to get a job and get paid for part-time, while they work full time, 8 hours per day.
4) the rate of long-time unemployed was 70% in 2014.
5) high school graduates are more affected by unemployment (28.6%), when compared to compared to university and vocational school graduates (20%) and university post-graduates (12.5%)
6) The economic crisis, the dramatic rise in unemployment and the implementation of austerity programs, which have caused significant reductions in disposable income in recent years have highlighted the structural weaknesses of the Social Protection System (SPS) in Greece. Also, the reduction of state funding and the weak social protection structures to support the expanded needs of specific society groups affected by austerity and recession contributed to unprecedented social phenomena in the country increasing phenomena of extreme poverty and deprivation.
7) Income inequality based on the Gini index has been increasing in Greece from 32.9% to 34.4%, which is the highest value among the EU-15 countries for 2012.
8) The poverty rate increased from 20.1% to 23.1% between 2009 and 2012. The poverty gap index recorded a more significant increase, emphasizing the reduction of the incomes of the poor, ie, in other words, the poor become poorer. Alternatively, using the poverty line of 2009 and weighing on a purchasing power of incomes, the absolute poverty index shows that in 2012 the proportion of people with disposable income below the corresponding poverty threshold in 2009 amounted to 42.3%. In short, the poor population in Greece doubled. 4 in 10 people in Greece had a disposable income below the corresponding poverty threshold in 2009.
The absolute poverty rate
for full-time employees was 7.6% in 2009 and 19.7% in 2012
for full-time self-employed was 23.5% in 2009 and 37.4% in 2012
for part-time workers was 30.1% in 2009 and 51.7% in 2012.
for unemployed was 34.85 in 2009 and 65.5% in 2012. Here it shows very clear the weakness of the Social Protection System to actively support the income needs of the unemployed.
for pensioners was 18.6% in 2009 and 31.3% in 2012.
9) despite internal devaluation, neither prices have been reduce nor were the oligopoly* phenomena confined from the market. [one of the chronic diseases of Greece’s economy]
Fiscal consolidation programs: Epic FAIL
In particular the report’s authors, led by scientific director of INE economy professor K.Argeiti emphasize that macro-development model of Greek economy depends on the dynamics of the relationship: consumption-domestic demand – growth. The economic policy of fiscal consolidation and internal devaluation is incompatible with the current structure of the Greek model of growth and does not lead to the exit from the crisis.
The main argument of the study is that the correlation of the public debt crisis and the country’s competitiveness deficit in fact traps the economy in the debts crisis and the economic crisis when it reduces salaries, pensions and social expenditure, undermines the labor law and fundamental labor and social rights, and degrades the social security system.
The report authors emphasize that the fiscal adjustment functions as compression mechanism to the liquidity flows in the economy and, undermines the ability of households and businesses to meet their loan obligations. Consequently, the fiscal adjustment serves as transmitting mechanism of the fiscal crisis to the financial system.
“Five years after the outbreak of the sovereign debt crisis and the implementation of fiscal austerity programs, Greece is still trapped in financial debt trap. The analysis shows that the failure of austerity as a means of achieving fiscal consolidation are twofold. First it did not contribute to the recovery of solvency and reliability of the Greek public sector and second it destabilized the macroeconomic and the financial system in the economy. Consequently, the economic adjustment programs failed to create sustainable conditions of financial stability, credibility and independent access of the country to the capital markets
The Greek economy continues to show unsustainable primary surplus as a result of the fiscal austerity and high credit risk.
The report proposes among others the redesigning of the macroeconomic policies like ‘reinvestment of the interest’, guaranteed employment to combat unemployment and boost consumption, investment and restore of the minimum wage.
These are only some of the findings of the study with the title “Greek Economy and Employment 2015″.
In fact here I would conclude my post with a sentence like “been there, seen that” in previous reports and surveys of the last 3-4 years and a short note saying: the situation is worse each and every year and there is no way out.
*oligopoly (from ὀλίγος (olígos), meaning “few”, and πωλεῖν (polein) , meaning “to sell”) is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher prices for consumers. Oligopoly has its own market structure.
Now we know why everything is much more expensive in Greece than in other EU, EZ countries.
Analysis of the problem is an important first step and the more detailed the better, even if, like you say, it isnt really new. Do they offer solutions/alternative ideas in this report? That is what Id really be interested in. Not just how we got into this mess, the more important question is how to get out of it/ how to avoid it next time(and we all know there will be a next time soonish somewhere else on this planet)
go to the link, copy paste + have google translate it for you.
Reinvestment of interest and strengthening of private investment I get, even though I find it a bit nonspecific. A guarantee/the right to a job is a bit of a weird proposal. How can you garantee a job in a market economy? Also I have to note that this amounts to yet again more foreign money. They do not at any point give an indication as to how the deficit could have been adressed in 09 without the negative effects on the living standards.
What I find supremely frustrating is that lower wages did not lead to lower prices (especially in the export sectors) meaning instead of actual increases in competitivness it just amounts to rich businessoweners getting richer on the backs of ordinary citizens.
as you say: not specific that’s why I didn’t bother… and concerning the prices: yes. as frustrating as you cannot imagine
The characteristics of all EU economies are well known, and different from the USA. One is that prices are downward sticky, even when wages go down. Another is that the non-traded sector is relatively insensitive to cost pressures, whereas the traded sector responds rapidly to cost imperatives. The reasons for these things are structural and include oligopolistic sectors as well as limited possibilities to reduce costs.
All of these things are known, were known, and remain known to economists. All of these things mean that the various programmes inflicted on Greece could never have any possibility of a successful outcome. It is like fixing the plumbing in a house, refusing the expert advice of competent plumbers, and getting politicians to design the water pipe system instead. Anf watching the inevitable flood…
Now you know how the eurozone works. With assholes making decisions, and complaining angrily when experts who know their job try to explain how things really work.
Sure there must be good reason why everything is more expensive in Greece “than in other EU, EZ countries” – lack of free market caused by oligpoly structure of economy.
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To the large extent origin of this is in Balkan family oligarchy structure (see for example family clans in Albania), plus of course multinationals are also often oligopolies. In Greece this was cultivated by EU funds for long time. Now we see results.
Everything is NOT more expensive in Greece. What are you talking about? Of course, when you impose massive taxes on everyone and everything in order to pay the Germans, yes… things to get to be more expensive.
you are wrong. Prices of multinational companies even for basic needs were always higher than in other EU/EZ countries.
Ahhh. Actually, I was referring to Greek produced goods. Yes, multinationals price according to local demand and market competition. When they detect an uncompetitive market, they pounce with high prices and a take it or leave attitude. The clearest case is that of pharmaceuticals — and guess what, the whole of the EU refuses to have a Europe-wide market so that drugs companies can charge what they like.
You may be misled too by thinking of Germany, which has very low prices in comparison with all of the EU. Other northern countries, such as the UK and France, are not as cheap as Germany.
“You may be misled too by thinking of Germany, which has very low prices in comparison with all of the EU”
If youre refering to pharmaceuticals here Id love to see your numbers, because everything I can find says clearly that drug prices are higher in ger then in most if not all other european countries.
I know for sure the netherlands is quite a bit cheaper.
on the other hand ‘self-participation on perscription drugs” in lower in GER than in GR. GER has among others income criteria, quarters etc, that are totally absent ion GR. BTW it was German ‘experts’ who assisted GR in the ‘self-participation % – drug prices” in 2012. Result: catastrophic!
Self participation rates are an important issue (again if someone has numbers Id love to see them), but its a different one. The higher self participation costs= the higher the burden on low income.
On the other hand lower participation wont matter a thing if the government gets the additional money for the health insurance by raising f.e. vat on food.
At this point in time I think overall costs are more important, because every euro paid to the pharmaceuticals is a euro leaving greece.
All in all this is an issue im very conflicted about. On the one hand its a moral imperative to make them as cheap as possible so the maximum number of people get access, on the other hand pharmaceutical reasearch is extremly expensive and uncertain. I dont have a problem with companies making a profit on this so long as its used for further reasearch. The problem starts when the money from sick people ends up as dividends for shareholders or a new mansion for the ceo.
Pharmaceutical industries make most of their profits with totally overpriced medicine that they justify with research but in reality all this research is done by state-run universities and so creates huge extra-profits from taxes to big-bastard-biz.
15% of Greek economy is located in pharmaceutical-industries, esp as generic producer.
Also the way you like to count in and switch around “VAT from food” is not as easy as you imagine as healthcare-insurance and hospitals are all autonomous areas just like taxes.
Anyway it’s fraud to take extra fees from people who are already forced to paid insurance for and lots of insuranced people just don’t go to doctors any more to not get ripped off as also just too many doctors get their frat cars and villas paid out of this corrupt system.
vat for food is just an example. all I mean is that it doesnt change anything if you give people money into one pocket and take it out of another.
Oh guys you solved the problem the usual Greek way.
The problem is in: a) high taxes (Normal in rest of EU)
b) bloody foreighn monopolists
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BTW Xenos I just copied the word EVERYTHING from KTG. I am Sure there are some cheaper commodities, but it is known that even basic foods like butter, eggs, bread are abnormally expresívne. I am afraid this is not caused by Monsanto, RWE and Gazprom.
side note: natural gas is here more expensive than it should have been.
:))) Our slavic brothers. All gas from Russia was in last x years sold at much higer prices to Central Europe compared to the transparent prices on commodity exchanges. Even more, Russia added Export tax 100 USD/1000m3.
What a Slavic bullshit, this gas comes from Asia not from Slavia and everybody knows that the ultra-mega-wide spread use of Gasakia for Easter fireworks is the reason.
KTG didn’t write in the article anything about “foreign” oligopoly, btw, this comes only as you pick up single points of goat-shit to lead the discussion into your anti-Greek hate agenda.
What % of gas you get from Russia?
You are quite wrong on all of this. In comparison with the UK, Greece is far cheaper for most things — some exceptions, such as low quality diseased hen’s eggs, flavourless chicken injected with hormones and bacteria, high-sugar drinks that children are addicted to, etc. But in total, food in the UK is very expensive unless you buy crap from Lidl. As far as pharmaceutical products are concerned, Germany is way cheaper than the UK for anything that I ever needed — which means that I get things by post from Germany. What else? Books perhaps? Well, there are no bookshops left in the UK. Books are bought online from Amazon, with its abusive employment practices and avoidance of national taxes.
You see, you people just don’t get how you are being ripped off by big business and politicians. Even when experts point it out to you, you quibble about stupid details. Greece is not significantly overpriced; it is underpaid and it is overtaxed. End of discussion.
“As far as pharmaceutical products are concerned, Germany is way cheaper than the UK for anything that I ever needed ”
I ve looked and found several studies now none of which show what you claim. In all of those UK drug prices are marginally to significantly lower then in ger.
“Even when experts point it out to you, you quibble about stupid details. …End of discussion.”
Perhaps if you were to back your claims with numbers instead of just claiming your expertise/ the stupidity of everyone else automatically wins you every argument people wouldnt need to quibble so much.
It depends what the expert studies are looking at. If they look at drug costs to the NHS, then it is possible that the costs are lower. That is in the nature of the system which allows a national monopsonist to reduce costs by negotiation. For things outside the NHS system (which is what I buy) the UK is way more costly than Germany and actually even slightly more expensive than Greece.
The problem with all you amateur economists is that you don’t grasp the complexity of economic issues — in other words, how the world works. Without massive research grants, numbers mean nothing. Most of the massive research grants come from big business and governments — who pay to get the results they demand. I can tell you this from personal professional experience: the funders tell you in advance the results that they want to see. Some people, like me, tell them to go fuck themselves, and we don’t get any more research money from that source. Those who rig the results, get repeat funding.
local demand and market competition = not so simple to generalize. Add: price cartels, import taxes -if in/out common market.
No matter how much you try you will not find an excuse for the high prices in Greece other than greed. General rule is: Greek market/seller/service provider/leaser is used to work for a high % profit.
OK I am not expert, but given my knowledge of how Albanian communists (including secret police) organized smuggling to gain hard currency, and other info how it worked in your region when Turks were rulers (plus we, Czechs, and Magyars have also oligarchs to large extend KGB/FSB linked), the domestic oligarchy creates the problem. Therefore I mentioned Varoufakis family clan before, as an example.
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BTW I don’t understand your last sentence, because greed in free/efficient market creates competition. This is how market works, so in my opinion, you just confirmed what I said.
there was no hard currency when the Ottomans were in the area. you speak as if oligarchy is just in the area and not in other areas.
Competition means to put crap parts into machines so that the customer has to buy new shit because they break down shortly after the guarantees run out.
How did you come to this ground breaking idea, that competition decreases quality of output?
I suppose GiGi means: competition means low wages, production cost. Look at the nice example of products Made in China.
Because people who work in these factories told that to the interviewers and it shows exactly how capitalism works: “Sure we could produce it in a way that the machines would keep on working for 10, 20 years or even forever but then our boss calls it non-competitive and not sustainable for the company and our jobs as it’s better to sell ten times the same shit.”
The only thing that went better with the new European laws on warranty were Italian bike-frames because before that they only had a guarantee for one year, all the rest simply stops working after 2,3 years.
It’s standard knowledge amongst competent economists — not the ones employed by the Troika to repeat neoliberal garbage.
In fact, it is an observable reality that since 2008 most western produced machinery has collapsed in quality — including German manufactures. This was caused by increased competition with collapsing markets: the solution found was to cut production costs by reducing quality and thereby maintaining or reducing prices while increasing unit profitability.
Read any expert blog — e.g. about washing machines — and you will discover than older machines were typically made with life expectancy of 25 years (one standard load per week) and now are planned to last only 10 years. That’s a reduction in quality of 60% between roughly 2003 and 2009.
Neoliberal economics is all about making rich people richer: the economic “theories” are just propaganda for idiots to swallow.
OK Guys, please see lectures “kenneth train economics” on youtube to understand what is the role of competition, what monopoly creates e.t.c. No economics education is required and it is nicely structured and funny.
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KTG please laeve the link here:)
https://www.youtube.com/watch?v=T7yC-5IDhKM&list=PLgHCxv8A-ukmwlxT0Ba85yvkWaHSipeDp
neither communists in Albania:)
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1. Family structures are very strong in Balkans compared to rest of Europe.
2. Sure there are also other than structural reasons for those high prices – like for example unnatural demand driven by EU support and loans (in which case, the current deflation and output implosion is not only result of austerity measures, but also just end of such inflation pressures)
Greed also creates poverty, destitution, most social problems, not to mention environmental disasters and wars… Your so called “free/efficient market economy” or neo-liberal capitalism is nothing else but rampant fascism decorated with a $, € or £ sign. It doesn’t make it right, it doesn’t even give it an air of respectability. It simply hides its ugly reality…
There is a difference between self interest and greed.
Indeed, self interest is governed by the concept of “enough”, Greed has now limits, nor scrupels. Sadly enough, “enough” is a totally alien concept to capitalism, which is based on the utopia of growth rather than the reality of sustenaining.
Germany is not cheaper if you go buy your shits outside of the chains, in normal shops and supermarkets that pay their employees normal pay + 13th and 14th salaries, hire their people full-time and let them get organised in unions. That this kind of “uncompetitive” shops still exist shows that lots of people who can afford it boycott these bastard-chains that then in crisis hidden countries are the argument used against these countries.
This is true. The cheap outlets in all countries are US-style low-pay mass sales online, which actually deprive the population of decent jobs. But the sheep are so stupid that they think the low prices that deprive them of good employment are wonderful. This is the ideology of neoliberalsm that has been forced down out throats for the last 35 years or so.