Thursday, June 10, 2010

Greece's poorest in fight for survival

Trade unionists march in protest against austerity measures - Thessaloniki, Greece

With the summer finally here it would be nice just to enjoy the sun and forget our worries with some time at the beach. However, no matter good the weather is the fact still remains that the Greek economy is in serious trouble with signs of economic decline appearing everywhere from the sight of pensioners dumpster diving to the fact that consumers are cutting back even on staples such as milk and other diary products.

Even with the help that people have been so generous in giving me after the break - in I am still wondering how I'm going to get through the next three months, traditionally a period when people are not interested in doing English lessons. On the other hand I see people especially those who live in the poorer neighbourhoods on the west side of the city for whom the coming summer is going to be a fight for survival. Contrary to what you may have read in the foreign press about profligate Greeks living high on the hog there are millions of ordinary people who are worried over how they are going to pay household bills and feed their families.

These are Greeks on lower incomes (some of the lowest in the EU) who do not have a steady income, jobs in the public sector and who saw little or nothing of the massive state expenditure racked up by previous governments. These are the Greeks who are obliged to send their kids to dire state schools, live in areas with lousy roads, high crime and virtually non-existent public services. They are the Greeks who take their risks in a public health service which is running out of basic medical supplies and in many cases do not have the staff to offer proper emergency care.

To add to their burdens Greece is currently in the grip of an inflationary cycle with prices rising by 5.4% , three times the Eurozone average. Much of this increase is fuelled by rises in VAT and indirect taxes on petrol and much due to ever present price cartels which make sure that competition is in name only.

With shrinking incomes comes rising unemployment, especially for the young and women who were already disadvantaged in the job market wages have fallen still further leading to a slow death dive in which less and less money is available which in turn results in demand shrinking and so yet more job losses. It's very hard to see how the economy is going to avoid this. Despite talk of PM Giorgos Papandreou's talk of stimulating development the reality is that the government has little to offer other than words.

What seems likely is that whatever promises the present socialist PASOK government has given to the IMF/ECB in return for further bailout money are going to be harder to keep. Not simply because the austerity measures they demand are causing massive social upheaval but also because with the Greek economy tanking sources of tax revenue are drying up faster than a puddle in Death Valley. Those who made their billions through their political and personal connections with the two major parties have long since made sure that their wealth is beyond the reach of the taxman, leaving Athens to grab what it can from those citizens who do not have access to Swiss bank accounts or off-shore companies.

As the Greek parliament once again goes through the annual charade of investigating itself for corruption and once again manages to avoid bringing even one of their ranks to justice the rest of Greece looks on disgusted with this particular puppet theatre, convinced that whatever political capital PASOK and New Democracy had has long since vanished.


Anonymous said...

I called a relative who lives in the city and is "comfortablely off". Apparently things are indeed very dire. Her own resources are diminished and she worries about the city's families who will be demoted from a middle class existance to one of poverty. There is simply no solution. The amoral behaviours which catalysed this disaster cannot be undone. If I were unattached I would come and volunteer to teach English in a marginalized school. Feeling very helpless/hopeless about my people.

Anonymous said...

I probably know as much about Greece as the next guy. However, with Greece at the tip of the European debt crisis, I am trying to learn more about the country and its economy. And what better place than blogs by those on the ground. Thank you.
I live in China, and from what I have read there seems to be much the 2 countries have in common. I have read you can divide the economy of Greece into 3 parts: the public sector, the market economy (“real” companies such as National Bank of Greece or Coca-Cola Hellenic Bottling Company) and the black economy (off-grid, no taxes).
(1) Well, China has a bloated public sector, too. For example, last week I walked into the retail shop of a state-owned outdoor gear company. There were about 10 attendants just sitting around chatting in a smallish store with no other customers. Nobody helped me at all. Compare this with when I go into a North Face shop or some other outdoor gear store; the attendants immediately come up to me and try to help me. I know the shop attendants working for the state-owned company make more money than those working for the North Face shop, even though the state-owned company makes less money or is even losing money.
(2) Extensive corruption. Everyone has heard the term “guangxi” (“connections”) used to describe China. There are people who take pictures of the sons and daughters of govt. officials living in expensive houses in Canada, Australia and the U.S., and driving luxury cars. Every day, on the streets of Beijing I see Porsche Cayennes driving next to home-built motorbike taxis.
(3) The “market economy” is burdened with carrying the entire economy. It is the people who are working hard for very little who are carrying all the profligates it seems to me. Those factory workers at Foxconn who were leaping to their deaths were making 900 RMB or 109 euros a month standing at assembly stations working 6 days per week. Foxconn bought land in China to obtain their hard labor – and local govt. officials got money from the land sales. Foxconn is competitive because of those hard workers, and its revenue is taxed, and the money goes to help the bloated public sector who can’t turn a profit – such as those 10 outdoor gear store employees who aren’t contributing a single bit by just sitting and chatting.
I will say there are also places where Greece and China are very different, of course. (1) The “market economy” of China is a bigger piece of the pie and getting bigger. I see fewer and fewer of those state-owned enterprise stores every year. (Perhaps it’s because unions are less powerful here – I don’t know.) (2) China does a much better job collecting taxes on the whole. (3) Chinese have sold more than they have spent, and have accumulated a great deal in foreign reserves.
However, it is the undeserving public sector (and I’m not saying every single person of course, but many who grab a paycheck for little to no labor) and corruption that gets people fuming – in Greece and here.
And I get sad that it seems the corruption at the top makes the wider population feel they have a license to be corrupt/immoral. Recently I saw a report of street vendors selling lamb kebobs soaked in dangerous preservatives so they could last longer, and some vendors selling rotten ones. And how it was difficult to taste the difference after being grilled with a lot of chili and cumin.

Anonymous said...

I am asking: Don’t you see hope for Greece?
It seems to me that at the very least, many of Greece’s problems have a solution.
• The Greece government needs money, and there is a large part of the population that has been escaping taxes. This is unlike many other countries that need money, but have been taxing all their citizens quite effectively.
• Greece actually has a very “real” economy doesn’t it? It has agricultural products; it has the Aegean and a rich history which tourists clamor for; it has many of the world’s largest ocean shippers. Isn’t this better than countries where much of their GDP is built on the financial and insurance sectors? I read that the financial sector makes up 8% of Ireland’s economy.
• Is there no belief in the IMF? The Greece government got into financial woes. Now it must submit its budget and austerity measures to the IMF for at the very least quarterly reviews. If the Greek government is corrupt, then isn’t it a good thing there was this debt crisis that brought the IMF “policeman” to keep his eye on the Greek government? Shouldn’t Greeks be glad that Greek politicians who couldn’t police themselves must now “open the books” to the IMF?
o Also, the IMF said they would not target Greece’s poorest. Sure, Greece’s poorest feel the pain of increased prices. However, there were no new policies specifically targeting them right?
Can the current debt crisis in Greece not be the wake-up call the country needs? If you engage in unhealthy life practices every day, then won’t a heart attack finally convince you to change your ways? Isn’t this debt crisis the heart attack the country of Greece needs to finally understand that things must change?

teacher dude said...

Thanks everyone for the insightful comments. I think that one of the points I want to get over is that the crisis in Greece cannot be reduced to simplistic stereotypes and that other countries face problems similar to Greece with corruption, debt and inefficiencies.

I would disgree with the idea that the poorest are not being targeted. The bear the brunt of the measures not because they are poor but they have not alternatives. The present government is unwilling or unable to tax the richest so resorts to indirect taxation via utility charges and VAT which means that the poorest pay far more of their income in taxation than the rich.