Tuesday, 28 March 2017

Greece shrinking

Business at fertility clinics is down an estimated 25-50 percent compared to 2008 because Greeks feel they can't afford to raise children, or more than one child. 

About five percent of births are estimated to be in vitro, though accurate industry figures do not exist. The fact that Greeks are turning away from in vitro fertilisation in addition to the fact that live births of naturally conceived babies are declining, shows that the decline is due to economic reasons. 

Births in 2015 numbered just under 92,000 compared to 118,000 in 2008, a drop of one fifth. Over the same period, deaths soared by 12 percent, from 108,000 to 121,000, meaning that on the basis of reproduction alone, Greek society is shrinking at a rate of about 30,000 people a year. 

Live births.
(Source: Hellenic Statistical Authority, ELSTAT)

(Source: Hellenic Statistical Authority, ELSTAT)

However, there is further shrinkage due to emigration. About 45,000 more people left the country in 2015 than took residence in it. Emigration rates have accelerated since the onset of austerity in 2010 (see table below). Since then, assuming 2015 trends continued in 2016, an estimated 700,000 people have left while 400,000 have taken up residence. 

Immigration and emigration since the fall of the Iron Curtain.
(Source: Hellenic Statistical Authority, ELSTAT, 1 Jan 2017)

Taken together, reproductive and migratory trends mean Greece is shrinking by about 75,000 people a year, or 0.69 percent. The economic crisis is no longer an existential concern just for individual families, but for the nation as a whole, and needs urgently to be addressed with growth-promoting policies and pro-child policies. 

Read more on the government's current impasse with creditors

Tuesday, 21 March 2017

Down to the wire

Greek finance minister Euclid Tsakalotos on Monday offered a new timeline for the conclusion of Greece’s current review: the first round of the French presidential election on April 23.

Speaking after the Brussels Eurogroup meeting, he said he, his deputy and labour minister Efi Achtsioglou would remain in Brussels to resolve the last remaining issues: labour reform and pensions. Greece has been resisting another cut to pensions spending and a stiffening of labour laws to allow mass layoffs and restrict the right to strike.

“Our strategy is to remain here, make substantial progress, and leave very few issues, if possible none at all, to have the institutions return to Athens and have a deal, a package of measures, we will have agreed upon before the April 7 Eurogroup in Malta,” said Tsakalotos. “After that I think the process can speed up even more and we can go to the International Monetary Fund’s spring meetings in April (21-23) to seal the final details.” 

The French election will likely see a shift to conservative government, since the frontrunners, the Front National’s Marine Le Pen and the centrist Emmanuel Macron, are running well ahead of socialist candidate Benoit Hamon. Any such government is likely to be less sympathetic to the Greek plight than current socialist president Francois Hollande.

The fact that the Greek side wants to take negotiations down to that particular wire suggests three things; first, Tsakalotos and premier Alexis Tsipras have decided to make a show of being tough on creditors; second, they need time to rally their MPs’ support behind unpopular measures, particularly for the left; third, they are reluctant executors of this particular round of reform, and want that to be abundantly clear.

Eurogroup chairman Jeroen Dijsselbloem confirmed the intensification of talks on “key issues” in Brussels this week but warned that, “there is no promise that all the work will be done by [April 7], but there is a strong agreement and a strong will between all parties involved.”

A Bloomberg analysis on Monday pointed out the danger of Greece slipping into another prolonged period of negotiation until it defaults on its creditors, as happened in June 2015. 

Friday, 17 March 2017

Why Greece and its creditors still disagree (or, Everything you wanted to know about Greek taxes but were afraid to ask)

Two statistics published this week speak volumes about the heavy yoke Greek private sector workers labour under.

The first concerns unpaid taxes. Under Syriza, which came to power in January 2015, these have soared, but the government keeps breaking its own record.

According to the Independent Public Revenue Authority, unpaid taxes for January alone amounted to €1.63bn. That’s partly because on January 1st a new law took effect that changes how many Greeks pay for social security. It attempts to make up for the fact that pension contributions have fallen from €11.5bn in 2009 to €9.1bn in 2015 due to rising unemployment and falling wages.

Unfortunately, the new law makes up for this shortfall by overcharging the 3.5mn people left in the workforce. Until January, salaried Greeks paid a percentage of earnings and the self-employed - more than a million taxpayers – paid a flat monthly fee. 

As of this year, the self-employed also pay a percentage of earnings for health and pension contributions – 27 percent of gross income, due to rise to 31 percent over three years. Once other expenses have been deducted, income tax of between 22 and 45 percent is calculated on the remainder. For most, this amounts to a sharp increase in social security contributions.

The staggering level of taxation is one reason why many young people are leaving the economy, and even established professionals with client bases are closing their tax books. The government’s inability to collect has now forced it to twice push back the January social security contributions deadline from February 28 to March 17 and March 31.

The state’s past performance in tax collection does not make inspiring reading, either. Taxpayers now owe a record €91.78bn, up from €81bn last year, €71bn in 2015 and €60bn in 2014.

Most of that will never realistically be recovered. Nine billion euros are owed by public sector companies, which are used to government handouts and easy loans backed by state guarantees. The culture of non-payment begins at the top. Another €13bn is owed by private sector companies that have folded. Even the €69.58bn that is owed by non-bankrupt individuals and companies in the private economy will not realistically be recovered, since it is difficult for people with little or no income to pay taxes.

Under pressure from its creditors, the International Monetary Fund and the eurozone, the government is moving on the country’s four million offenders: 851,000 are in the process of having property or deposits confiscated, while twice that number are in danger of confiscation.

The new figures are sure to hurt the government’s claim that the austerity measures taken over the years are enough to produce a primary surplus of 3.5 percent of GDP demanded by creditors. The IMF believes more measures are needed.

The main reason Greece’s current review by creditors is such a dragged-out affair is that there are no easy answers to the question of how to tame Greece’s main expense: its pensions.

The government argues that after 13 rounds of cuts, pensions are already low. The chart below, supplied to The New Athenian by the labour minister on February 20, shows a breakdown of Greece’s 2.65 million pensioners. A good 58 percent of them earn under €800 a month before additional benefits.

Source: Greek Labour Ministry, Feb. 20 2017

The government also argues that cutting pensions before restoring growth to the economy is problematic, because studies reveal that pensions are now the principal source of income for half of Greek households. 

The IMF, on the other hand, argues that the economy will never recover while pensions remain the government’s biggest budget item, absorbing at least a third of tax revenue.

The government’s own pensions bill, brought to parliament last May, revealed staggering social security costs: notably that fully one half of the Greek debt, some €154bn, had been incurred by borrowing to pay pensions.

It is little wonder that the IMF insists on tax relief for businesses, rather than maintaining high taxes to redistribute the wealth to the poorest. Syriza argues that the latter will boost consumption and help business. The IMF argues that high taxes make business globally uncompetitive, and boosting consumption at home without boosting exports will create another unsustainable economy akin to that of the 1990s.

Earning gap between private and public sectors persists

The second heart-sinking statistic of the week was the other big reason for high taxes in Greece: the income gap between private and public sector workers. It is best illustrated by the table below: 62 percent of private sector workers net under €900 a month, whereas 66 percent of public sector workers net between €900 and €1,800 a month.

Source: Kathimerini, March 14 2017

Yet those private sector workers spend a billion euros a month paying the salaries of their public sector counterparts, making the public payroll the government’s second-highest budget item.

Neither group earns good money by European standards, but the figures, which were published by the Labour Institute, a think tank, seem to disprove a popular myth of the left, which Syriza also upholds: that what is suffered by one group is eventually suffered by the other. The figures rather seem to confirm that privileges earned through political pressure persist, even if diminished. In other words, the labour aristocracy Pasok created in the 1980s is still a 700,000-strong voting bloc capable of swinging elections.

Greece, like France and Italy, has long been a statist culture and will remain so for the foreseeable future. This is good in that it provides strong popular support for socialised medicine and decently funded public education – essential prerequisites for a secure and civilised society. But it is bad in that it allows a class of party-appointed ne’er-do-wells to dwell inside the state culture and destroy its value for taxpayer money. Until political parties realise they must divest themselves of their appointees, Greece will run the risk of throwing out vitally important state services provided by hard-working doctors, nurses and teachers at great personal sacrifice, along with the louts they must carry.

Thursday, 16 March 2017

A Syrian refugee family's year-long Greek Odyssey

Refugees in Greece finally swapping canvas for bricks and mortar

The surviving members of the Alali family on the balcony of their second storey flat 

This article was published by IRIN News

THESSALONIKI, Greece – By the time Ilida Alali was 16, she had been a prisoner in her own home for four years. Both government and rebel ordnance fell without warning on the hotly contested Karm al Myassar neighbourhood near Aleppo’s airport where she and her family lived. In any case, she had nowhere to go. The Free Syrian Army had occupied the area’s schools since she was 13.

In January last year she asked her father, Ahmed, if she could go buy some potato chips. “I said ‘okay’,” he recalled. “She went as far as the corner shop and that’s when the bomb fell. When I heard the explosion, I ran out and I found the place covered in dust and my daughter in pieces.”

Ilida’s death was the final straw for the family. Ahmed’s wife, Ramia Aldaher, had already lost a sister and three brothers to the war. A month later, the entire extended Alali and Aldaher families – some 41 people – stole out of Aleppo under cover of night.  

“We took nothing – just the clothes we were wearing and our IDs,” said Ramia. They trekked more than a thousand kilometres to Izmir on Turkey’s Aegean coast and crossed to the Greek island of Lesvos in a rubber dinghy.

The Alali family had fled a civil war only to land in the midst of a humanitarian crisis. An estimated 850,000 refugees and migrants arrived in Greece during 2015 and another 150,000 during the first three months of 2016. Most continued through the Balkans towards northern Europe where member states were increasingly desperate to stem the flow.

Fences went up on the Greek border with the Former Yugoslav Republic of Macedonia three weeks before the Alali family arrived. They managed to leave Lesvos just two days before the EU-Turkey agreement went into force, which would have kept them there during their asylum process, but their plan to reach Germany on foot had to be scrapped.

The closed border had left more than 50,000 refugees stranded in mainland Greece - too many for civil authorities to house. Under pressure from the European Commission, the Greek military set up 30 tent cities on industrial sites and disused army bases across the country.

Most of these camps were far from urban centres and difficult for aid organisations to reach. With almost no time to prepare the sites, they initially lacked basic amenities such as running water, bathrooms, heat and electricity.

The brick warehouse where the Alali family lived for six months, behind Gate 10A of the Thessaloniki commercial waterfront. It is now used for storing potatoes
On 17 March, the Alali family arrived at the place they would be forced to call home for the next six months – a cavernous warehouse behind Gate 10A in Thessaloniki’s port.

“For about the first month we slept on the floor in sleeping bags given out by the army. Then the mayor visited us and asked the army to send us cots,” said Ahmed.

The mayor also ordered the delivery of heating units, portable lavatories, showers and electricity, but 450 people were still sharing a space where blankets hung from ropes provided the only modicum of privacy. 

These arrangements came to an abrupt end when an electrical fire broke out one September morning as people slept. The warehouse was cleared and the Alali family was moved to a tent in Langadikia camp, east of the city.

“The sun hit our tent at seven in the morning and we had to get up. During the middle of the day we had to go to the forest and sit under the shade of the trees,” Ahmed told IRIN. “When winter came, it rained and the whole tent was drenched. The water came up through the ground... Sometimes we asked for new blankets and were told that there weren’t enough, so we slept under wet blankets.”  

Worse was to come. In mid-December, overnight temperatures dropped below freezing and in January, rain turned to snow. Residents of the camp tried to take refuge in the few brick buildings available, “but there wasn’t enough room for everyone,” said Ramia.

A young Syrian man is engrossed in his mobile phone as he sits in the Diavata camp on the western outskirts of Thessaloniki 
And yet there was plenty of room in Greece. The financial crisis and the introduction of a new property tax in 2011 had brought property sales virtually to a standstill. Hundreds of thousands of apartments stood vacant as unemployed adults moved back in with their parents.

In December 2015, the European Commission had announced an €80 million rent subsidy programme to provide 20,000 accommodation places for refugees in Greece during the following year. The UN’s refugee agency, UNHCR, was tasked with implementing the scheme but progress was slow. By early October 2016, it had secured only 13,000 spots leaving thousands of families still living in tents and warehouses during the height of Greece’s coldest winter in years.  

“We had this horrible winter and the conditions in camps deteriorated so badly that we were really afraid at one point that people would actually die of hypothermia in the camps - especially newborns, who were turning blue,” said Anne Forget who manages the Urban Response programme of the Norwegian Refugee Council.

A Syrian man reprimands his daughter for littering during their evening walk at the Diavata camp 

The NRC wanted to help address the housing problem before it became a crisis, but it was a latecomer to the housing programme. The European Commission funded its project proposal in September, and it wasn't until November that Forget's teams could start touring half a dozen camps in the area to identify those in greatest need of being moved into bricks-and-mortar housing. 

But despite the housing glut, the NRC struggled to find apartments to rent. Landlords were wary of a programme that was funded for only months at a time and of having refugees as tenants.

“Mainly the objections were, ‘I don’t want to rent to refugees because they are dirty, they have diseases, they will break my apartment. I don’t want to rent for a short period of time. Your rate is too low,’” said Forget.

In an effort to stay ahead of the worsening weather, the NRC decided to move 400 individuals into hotels. This enabled pregnant women, the sick and elderly and families like the Alalis to move out of tents, but the cost was high. The NRC paid €25 a night for each hotel resident – some €4,500 a month for the Alali family of six alone.

UNHCR eventually stepped up its efforts and by the end of 2016 had housed 21,000 refugees, nearly 12,000 of them in apartments. The agency’s spokesperson in Greece, Roland Schoenbauer, said the scheme was designed to provide temporary accommodation for asylum seekers while they awaited relocation to another EU country and that many more would have benefited if EU members had honoured their pledges to take in a total of 63,000 refugees from Greece. To date, less than 10,000 refugees have been relocated from the country.

Greek Migration Minister Yannis Mouzalas has also come in for criticism for the slow rate of progress on refugee housing despite unprecedented levels of EU funding. “You are responsible for 60,000 people with a billion euros, more than anyone ever had at his disposal,” said conservative MP Miltiadis Varvitsiotis in parliament last month, referring to the funds the European Commission says it has earmarked or disbursed to Greece for refugees since 2015. “I think any local government official would have done a better job than you.”
A Syrian woman fries a supper of courgettes, aubergines and potatoes at the Diavata camp 
Over the last month, the NRC has finally begun to transfer refugees into longer-term housing. It has put the Alali family up in an apartment for a quarter of the cost of the hotel, and estimates that through such savings it will be able to house some 2,168 people in apartments by July 2018.

For now, furnishings are sparse: “it’s mattresses on the floor; one mattress per person, one pillow per person, a fridge, a double stove… There’s no tables, no chairs, no frames, even, for the beds and no Wi-Fi,” said Forget.

The Alalis don’t seem to mind. After walking across Asia Minor and living in a warehouse, an open-air camp and a hotel, here, for the first time, they have a space of their own, and they are living among Greeks rather than refugees. They beckon guests to their only furniture – a sofa bed left by the owner, whose springs have long caved in – and sit cross-legged on the tile floor while their four children, aged six to 17, retire to equally empty bedrooms. “We are happy that we are in Greece. We are not in a good situation, but we are safe and better than before,” said Ramia.

Menios Skordas, a hotelier who rents nine studio apartments to Syrian and Afghan families referred by the NRC, admits that he was hesitant at first, but that “when I saw the faces of the children I lost every inhibition.”

He has noticed that they, too, have acclimatised. “For the first two months, they were very afraid,” he told IRIN. “Now they’re going to the supermarket. Once or twice they’ve taken the bus… The kids are amazing learners. In two months, they are able to communicate in Greek.”
Syrian men prepare to roast strips of beef for supper at the Diavata camp 
Schoenbauer of UNHCR described apartment living as a double benefit. “Just a few weeks ago, I visited a Syrian family in an apartment close to our office, he said. They told me, ‘every day our Greek neighbours are knocking at our door asking whether we needed anything.’ This is the kind of interaction that starts the process of integration from both sides and this is an underestimated benefit of the whole programme.

There are benefits for the Greek economy as well. The crisis has depressed real estate prices by over 40 percent since 2007, and 45 percent in the Thessaloniki area. Rents have fallen proportionally. UNHCR spent the European Commission’s €80 million plus another €5.4 million in donations on apartments and hotels last year. It could top that budget this year.

The money [landlords] get is much, much better than what they’d get on the [open] market, said Thessaloniki real estate agent Stefanos Vasileiadis, commenting on clients who have rented to Syrian families via the NRC.

Of the original group of 41 Alali and Aldaher extended family members, 27 have been relocated to Germany. Most of the rest are scattered across camps in northern Greece, where conditions are not as bad as they once were. Tents have been replaced by mobile housing units, adults receive a monthly stipend of €150 to feed themselves, and children can now attend Greek schools.

Mouzalas assured parliament last week that another 10,000 people will be moved to apartments in 2017 and a further 10,000 in 2018, doing away with the need for all but a handful of camps “if the EU-Turkey agreement holds”. Such schemes exclude the islands where, under the terms of that agreement, 13,200 people remain in camps with an official capacity of just under 9,000, while their asylum claims are processed.

Ahmed and Ramia have also applied for their family to relocate to Germany, a process that may take many more months. In the meantime, they are enjoying the privacy and space of their apartment, but they aren’t enrolling their children in Greek schools or putting down roots. They are waiting to start their lives in Germany.