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A snapshot of the Greek economy
The Greek crisis we don’t see
The economic impact of the Greek crisis has been well publicised. A recession that began in 2008 has led to GDP contracting by a quarter, while unemployment has risen above 27 percent. Greece’s fiscal consolidation effort has also received much attention. A general government deficit of 15.6 percent in 2009 was transformed into a small surplus in 2013 – one of the sharpest adjustments the world has ever seen.
What sometimes goes unnoticed, though, is the effect these developments are having on people and their daily lives. The social cost of the crisis is often hidden from visitors and casual observers. It lurks behind the sight of apparently relaxed Athenians sipping coffee in the sunshine or seemingly carefree islanders clinking together their second or third glasses of ouzo.
In fact if one excludes some parts of Athens and other big cities, the signs of the crisis are not always that visible. Perhaps the frequent media images of protesting, rioting and poverty mean that these are the pictures we store in our brains and the standard by which we measure whether people are going through turmoil or not.
There are a number of reasons why the signs of the crisis are elusive. Perhaps the overriding one is that the social impact can rarely be seen on the street, on the beach, in cafes or in restaurants. It is most evident in places that are out of our direct view: Living rooms, offices, factories, hospitals and in the deepest, darkest recesses of people’s minds. In these places, the crisis is very real and very disturbing.
Greece’s recession, which began in the second half of 2008, has put enormous strain on Greek society. An increasing amount of Greeks are finding themselves socially excluded.
According to the latest figures from the Hellenic Statistical Authority (ELSTAT), 34.6 percent of the population was considered to be living at risk of poverty or social exclusion in 2012. This is the highest proportion in the European Union. This figure stood at 27.7 percent in 2010, when the crisis broke out.
According to ELSTAT, 19.5 percent of Greeks are severely materially deprived. This is by far the highest rate in the eurozone, compared, for example, to 8.6 percent in Portugal, 5.8 percent in Spain and 2.3 percent in the Netherlands.
Greek household disposable income has dropped by more than 30 percent since the crisis began. This has contributed to even the basics becoming a challenge for a lot of Greek families.
A poll carried out for the Small Enterprises’ Institute of the Hellenic Confederation of Professionals, Craftsmen & Merchants (IME-GSEVEE), indicates that about a third of households (34.8 percent) said that they are behind in their payments to the state, banks, social security funds or public utilities due to money shortages. More than 40 percent (41.7) said that they would not be able to meet their commitments for this year.
The Public Power Corporation is disconnecting around 30,000 homes and businesses a month due to unpaid bills.
Unemployment is the biggest concern in Greece at the moment. Over the past four years the number of unemployed Greeks has risen by about 160 percent. As a result, around 3.5 million employed people have to support more than 4.7 million unemployed and inactive. There isn’t an economy or labour force in the world that could sustain this for much time, certainly not without the strains on its society showing.
Unemployment plays a big factor in placing a large number of Greeks at risk of social exclusion (52 percent of men without jobs are at risk of poverty) but even those with jobs are not always secure. More than 27 percent of Greeks with part time work are considered to be at risk of poverty, while the same applies for 13.4 percent of those with full time jobs.
It is also worth considering that roughly one in four Greek workers do not receive their wages on time, some waiting several months to get paid.
For those without work, the lack of comprehensive welfare coverage is a major problem. The jobless only receive monthly benefits of 360 euros for the first 12 months they are not working. As a result, only 15 percent of Greece’s almost 1.4 million unemployed are currently receiving financial assistance from the state.
Also, until now, there has been no safety net for the self-employed, who make up about 25 percent of the local work force. The government has proposed a scheme that will see the self-employed receive 360 euros a month for up to 9 months. To receive unemployment benefit for that long, someone will need 15 years worth of social security credits.
Public spending cuts have also contributed to more Greeks being left exposed to the effects of the crisis.
Without social transfers, almost half of Greece's population would be living at risk of poverty. However, social spending has been cut considerably over the last few years. Social transfers were reduced by 6.8 percent between 2012 and 2013. They are due to be cut from about 17 billion euros in 2013 to just under 14 billion this year – a reduction of more than 18 percent.
Apart from having limited access to unemployment benefits, Greeks are also being cut off from free or subsidized healthcare which is available to most unemployed Greeks for only two years. In 2011, Greece spent 11.6 percent of its budget on healthcare, compared to an OECD average of 14.5 percent. Per capita healthcare spending was reduced by 11.1 percent between 2009 and 2011 – the largest cut among OECD member states.
During this time, the number of HIV cases, instances of tuberculosis and cases of stillbirths have all risen considerably. Demand for mental health services has increased by more than 100 percent. According to a study by the University of Athens, 12.3 percent of Greeks are suffering from clinical depression at the moment, compared to just 3.3 percent in 2008.
A recent report by researchers from Oxford and Cambridge universities, which was published in the British medical magazine The Lancet, accused the Greek government and its lenders of being in “denial” about the impact that austerity is having on healthcare.
Family and charity
The lack of work and the scaling back of social welfare mean that often the main safety net available to Greeks in difficulty is provided by family.
The IME-GSEVEE survey suggests that for 48.6 percent of families, pensions are the main source of income. The average basic pension in Greece is just under 700 euros per month. It has been reduced by about 25% since 2010 and is due to be halved over the next few years.
Donations and services offered by volunteers have also become vital in helping Greeks who have been pushed to the margins of society.
The Municipality of Athens, for instance, feeds roughly 1,400 people a day, while doctors providing their services for free administer donated medicines to more than 4,000 patients a year who visit them at a volunteer clinic in Elliniko, southern Athens.
There are numerous other individuals and groups running programmes to assist fellow citizens. The safety net that has been unfurled by family members, volunteers and charities is one of the reasons that on the surface Greek society’s difficulties don’t seem too dramatic.
In fact, the awakening of this spirit of solidarity has been a ray of hope amid the social desolation being caused by the Greek crisis. As encouraging as this is though, we should not kid ourselves into thinking it’s more than a bright spot on a social landscape that is much darker than should be acceptable for a developed European country.
*This was part of a presentation given at a Friedrich Ebert Foundation event in Berlin on March 12 titled "The social crisis of the EU. Who bears the costs?"
Compelling and beautifully written account of Greece's suffering.