Greece Faces Long-Term Unemployment

This article was published by Al Jazeera.

Greece’s austerity policies could create a crisis of insolvency within the country, undermining the very reason they were implemented – to repay the country’s debt - says the country’s biggest labour confederation.

“I am afraid that we may see a phenomenon that could cause a social explosion,” says Savvas Robolis, scientific director for the Labour Institute of the General Confederation of Workers in Greece (GSEE), the private sector’s confederation of unions. “Right now many people can’t pay their taxes. That’s why state revenue fell 300 million euros short of January targets. If that continues, I don’t know if the state will be able to meet its obligations by June or July. It may not have the cash to pay salaries and pensions.”

The state heavily subsidises approximately 1.3 million pensions according to finance ministry data. It also pays the salaries of almost 800,000 state employees, roughly a quarter of all people still working in the country. Failure to pay those pensions and salaries in full would greatly impact on the state’s own tax revenues, and therefore its ability to maintain payments to international creditors.

Pensions and salaries have already been cut by 40 percent during the crisis, says GSEE’s Labour Institute. A new wave of austerity being implemented this year will raise those cuts to an estimated 50 percent. At the same time, Greeks have faced higher sales tax at the supermarket, higher fuel tax, a new property tax and a ‘solidarity fee’ of 1-3 percent on their salaries.

The squeeze is causing chronic pain. “I don’t see why a person should pay tax to hold onto a home they’ve already spent a lifetime paying off,” says Argyro Syriga, an unemployed mother of one. She inherited a house from her father, but now fears she may lose it. Her power was cut off six weeks ago because she could pay neither the electricity bill nor the property tax that rides on it. 

Syriga was one of tens of thousands of Greeks who marched through the streets if Athens during Wednesday’s general strike, organised jointly by the private and public sectors.

Taxpayers are bearing increasing indirect burdens as the government privatises state enterprises. Commuters who use the country’s main motorway, which runs from Athens to the northern city of Thessaloniki, rioted earlier this month as new toll booths went into effect. As a privatised entity the motorway now charges almost 22 euros for the 450-kilometre trip. Other lucrative state utilities, such as the natural gas monopoly, DEPA, and state refiner, ELLPE, are to go under the hammer this year.

In some cases it is unclear that the extra money raised goes to its intended purpose. The state’s Human Resources Organisation (OAED) says it has not seen a penny of the solidarity fee, which was to raise 300 million euros a year to relieve unemployment, national daily Eleftherotypia revealed on Thursday. OAED pays unemployment benefits and runs retraining programmes. Its head, Ilias Kikilias, said, “this money could be given to OAED for unemployment relief.”

“These measures are unbalanced, unfair and chiefly ineffective,” says Vangelis Moutafis, GSEE’s secretary for organisation. “They haven’t brought prospects to the economy, but they have produced plenty of drama in society.”

The problem is that the Greek economy is disappearing. It has shed 21.5 percent of its value since 2009 and will shed a forecast 4.5 percent this year. Austerity has made this worse, and by a greater factor that was originally thought. When Greece signed its first memorandum with the International Monetary Fund in 2010, its creditors assumed that that the economy would contract by about 50 cents for every dollar cut from public spending. On January 5, IMF chief economist Olivier Blanchard admitted that that multiplier was wrong.

“Forecasters significantly underestimated the increase in unemployment and the decline in domestic demand associated with fiscal consolidation,” wrote Blanchard. Some economists believe the recessionary effect may be as much as four times greater than what the IMF believed.

This recession is in turn shrinking the tax base. Unemployment has now risen to 27 percent. The Labour Institute expects it to reach 29 percent by the end of the year, and 31.5 percent next year. Underemployment, which is not reflected in nominal figures, also affects people’s ability to meet their obligations towards the state.

Greek breadwinners are now a minority of the population. According to figures released earlier this month by the Hellenic Statistical Agency, Elstat, 3.6 million people were in work last November, compared to 1.35 million unemployed and 3.34 million non-active members of the population.

Unions are angry that austerity is being carried out in the name of creditors. “About 80 percent of the wealth generated goes to lenders, to pay off interest,” says Robolis. “That is why debt is increasing faster than growth. We started out in the crisis with debt at 120 percent of GDP, and now it’s 175 percent.”

 They want Greece’s recovery plan to be redrafted on the basis of what is good for society, rather than lenders. “We’re not saying that we shouldn’t pay our debts. But we should do that when Greece is back in growth,” says Robolis. Even Finance Minister Yannis Stournaras recently said he “would welcome” a second restructuring of Greece’s debt, now 175 percent of GDP and set to rise to 189 percent this year.

In February last year, GSEE and its public sector counterpart, ADEDY, were stripped of authority to negotiate wage agreements with employers for each sector of the economy. Individual employers can now strike different deals with individual employees. The 2012 law also smashed through the floor of Greece’s minimum wage, which stood at 751 euros a month gross. It is now 586 euros and a mere 511 for the young.

Yet lowering labour costs has not brought investment and stanched the flow of a thousand people a day who line up to claim unemployment benefits. The unions have concluded that the policy of making Greece more competitive through wage reduction doesn’t work.

“For as long as these dead end, destructive policies continue, we will continue to act against them,” says Moutafis. “The strike is about [bringing back] sectoral wage agreements and workers’ rights, and it’s about more democracy and a dignified standard of living for salaried employees.”

The siphoning off of wealth also means that Greece’s productivity is declining because of underinvestment, says Robolis. “160,000 companies have gone bust in three years… The investments made by small enterprises are being destroyed. It will take vast sums of money to turn that around.”

Finance Minister Yannis Stournaras is more optimistic. At the beginning of the year he said that Greek exports had reached a record 24 billion euros in the first ten months of 2012. Although he only took on the job in June, he pulled off a small miracle in bettering Greece’s deficit target by half a billion euros in 2012. And he confidently predicts that the Greek recession will end in the last quarter of 2013.

“We have managed to turn the economy around,” he said on January 28. “Towards the last quarter of 2013 we’re going to have recovery, and definitely for the whole year in 2014. I feel sure, I feel certain, that this will be the last year of Greece’s recession.”

Even if he is correct, and Greece avoids the worst-case scenario of a unilateral default on its loans, it will have to contend with the social and political implications of entrenched unemployment. Robolis estimates that to create 50,000 jobs, the economy would have to grow by 3.5 - 4 percent, and that is not on the cards for the foreseeable future. 

How Should Democracy Deal with Fascism: Greece’s Golden Dawn Conundrum

This editorial was published by EnetEnglish. 

Golden Dawn Spokesman and MP Ilias Kasidiaris (C) walks with comrades. (Panayotis Tzamaros, Reuters)

Not for the first time, the spokesman for Greece’s far-right Golden Dawn party was in the spotlight for unbecoming conduct last Wednesday. He used profanity in parliament against a fellow member, who suggested that Golden Dawn did not suffer from a lack of invitations to televised debates, but failed to show up for them.

It is precisely through a televised debate that Ilias Kasidiaris came to international fame. In June last year, he flung a glass of water in the face of another fellow Member of Parliament from the radical left Syriza party, and slapped a communist party MP who sat next to him. Networks carried the pictures around the world.

On Wednesday he did not assault anyone, but even after his profanities were struck from parliamentary transcripts he escalated to calling all the other deputies in chamber a “bunch of coats” – football hooligan terminology for players not worth their salt. It was fairly standard in camera theatrical procedure for Golden Dawn, but nonetheless traumatic for politicians of a different generation.

Golden Dawn, which is ostracised as a purely fascist movement by the other political parties in parliament and is suspected of orchestrating violence against immigrants, is increasingly a subject of public discourse. The party garnered seven percent of the vote last June, but its approval rating has reached almost double that figure in opinion polls conducted this year. It has fed off a cumulative recession that has claimed a fifth of the Greek economy and led to 27 percent unemployment – higher than in the US during the Great Depression.

Dealing with the burgeoning Golden Dawn is dividing the rainbow coalition of conservatives, socialists and leftists. The senior coalition partner, the conservatives, have moved to protect their right flank. Last August they instituted a policy of police sweeps in city centres across Greece to pick up undocumented migrants and put them in detention camps. They may stay there for up to 18 months before being deported.

In the autumn, Interior Minister Evripidis Stylianidis announced that the government would stiffen Greece’s liberal citizenship law, which the socialists passed in 2010. Prime Minister Antonis Samaras issued orders earlier this month for the new law to be prepared, after the Council of State ruled the 2010 law unconstitutional. The new law is expected to revoke resident EU nationals’ right to vote in local elections, and to allow only residence permits, not passports, for minors.

Greece’s growing xenophobia has elicited a very different reaction from the junior coalition partner, the socialists. On February 7, party leader Evangelos Venizelos declared that parliamentary majorities should be calculated on the basis of a 282-member chamber, excluding Golden Dawn’s 18 deputies. He does not want Golden Dawn’s MPs being allowed to represent parliament in international bodies like the Council of Europe; and he wants the rules of parliamentary behaviour tightened so that outbursts like those of Kasidiaris, which increasingly seem tactical rather than spontaneous, carry disciplinary consequences.

Most importantly of all, Venizelos unveiled anti-racist legislation the socialists worked on before losing power. It would elevate racist crimes from misdemeanours to felonies, increase the penalties when such crimes are carried out by holders of political office, and extend a special form of residence permit to non-Greek witnesses in racist cases.

Venizelos’ thinking is that democracy in Greece today requires a stronger immune system. “Parliament currently cradles a party that is against parliamentary process,” he said. He does not seem to believe that Greek voters are, in their current mindset, able to discern an insidious decline in standards. “We are seeing a form of Mithridatism in Greek society today with regard to fascism,” he told reporters, referring to the Pontic king who immunized himself against poisoning by administering small doses to himself. “There is a gradual, drop-by-drop dilution of the conscience, a loosening of reflexes. Everything appears normal to us. Everything seems legal.”

While Golden Dawn is a bigger political headache to the conservatives, on whose voters the party preys, than to the socialists, the conservatives have never condemned the party in such unequivocal terms, or sought to confine them through the law. Yet polls are not rewarding the socialists. Recent soundings find them in inexorable decline as they bleed voters to the more radical left Syriza, while the conservatives seem to have suffered only minor attrition through their pursuit of austerity. Many observers believe that it is the counterweight of a nationalist social policy that has saved the conservatives. As Greek politics tend towards the extremes, there is little comfort in the thought that parties can either embrace the trend or die. 

Greeks Protest Against Unemployment

Greece's unemployment is becoming increasingly entrenched and long-term. That suggests not simply the need for an economic turnaround, but management of a social and political problem for many years to come. 

Al Jazeera English ran the following report: 

Intro:  The first general strike of the year is bringing much of Greece to a standstill. Some public transport in the capital, Athens, is working under court order. But an estimated three million workers in both public and private sectors are off the job today, to protest against repeated salary cuts. Flights to and from Athens are cancelled for eight hours. Banks, schools and government offices are shut. John Psaropoulos reports on the growing frustration among workers and the unemployed.

Police bring tears to the eyes of rock-throwing skirmishers in downtown Athens.

And there are even casualties in this fracas.

But it is a sideshow to the tens of thousands who marched for more jobs and fewer taxes.

Here the tears are of a different kind.

Less than a third of this country of eleven million is still employed. More jobs will evaporate in coming months, as the economy sinks into a fifth year of recession.

Small businesses - the backbone of employment in Greece - are hardest hit.

This mother of one ran a graphic design firm.

SOT - Argyro Syriga, Unemployed

Clients started not paying. I lowered my rates. At first I cut staff, then I worked alone, and then I just had to shut the business.

Hers is one of 160 thousand enterprises that have gone out of business during the crisis. She's had her power cut and could lose the home her father left her, because she cannot pay a property tax introduced during the crisis.

It’s not just that there are fewer jobs. People are also earning less.

This man teaches civil engineering at the Athens Polytechnic.

SOT Prof. Yannis Protonotarios, Athens Polytechnic

I've lost 700 euros during the crisis - a third of my salary. We're operating without copyers and paper. Students are demoralised.

Students like Mihalis and Themis, who say they dream of a new world springing from the ruins of a broken one.

Those who do work have seen their income fall by nearly half during the crisis. Minimum wage for the young is now about 550 dollars a month. Yet only one in two young people can find work. The unions say government policy is heading into a dead end.

Savvas Robolis is the senior researcher for the private sector unions. He fears that public revenues could collapse, and take society down with them. 

SOT - Savvas Robolis, General Confederation of Workers in Greece  (In Greek)

59:59:53   I am afraid that we may see a phenomenon that could cause a social explosion. Right now many people can’t pay their taxes. That’s why state revenue fell 300 million euros short of January targets. If that continues, I don’t know if the state will be able to meet its obligations by June or July. It may not have the cash to pay salaries and pensions.

The government says austerity IS working. It says exports reached a record high last year, and the finance minister confidently predicts an end to the recession by the end of this year.

But talk of numbers doesn't move these people. They're feeling the pain of a plummeting economy, with no end in sight.

John Psaropoulos, Al Jazeera, Athens