BY Nagia Nikolaou The working class in Greece has been hit hard by the greatest economic depression in Greek history, becoming the first “victim” in the Eurozone. The huge public debt in Greece (127% of GDP in 2010), in combination with world recession …


BY Nagia Nikolaou

The working class in Greece has been hit hard by the greatest economic depression in Greek history, becoming the first “victim” in the Eurozone. The huge public debt in Greece (127% of GDP in 2010), in combination with world recession resulted in the weakness of the Greek state to borrow money from the world markets.

As a result, the Greek Government decided to resort to the TROIKA (European Central Bank, European Commission and International Monetary Fund) in order to cover our borrowing by taking measures in relation to the public debt (i.e. the austerity package).

In 2010, the Greek Government reduced the wages of public servants on average  by 25%; increased the threshold pension age and until the end of the year 2011 further reduced the wages of public servants (in some cases by 60%); fired contract workers in the public sector; increased VAT rates from 9% to 13% (reduced rate) and from 19% to 23% (standard rate); made cuts in health system, public education etc.

It should be mentioned that the average wage and number of employees in the public sector was much less than the average of that of the Euro Zone before the crisis. Also labor market flexibility led to wage cuts and layoffs in private sector.

Finally, in 2012 for the first time by law the minimum wage by collective labour agreement decreased by 20% to €586 per month (and 30% – €510 per month for young workers under 25). Something similar occurred to pensions which were also reduced by up to 60%. The pension funds are ready to collapse due to the unemployment, the reduction of employers’ social contributions and the haircut of  Greek Government bonds (€10 billion were lost from pension funds).

On the other hand, since 2008 Governments keep giving billions of Euros to the Greek banks in order to protect them from collapse. The last three years have witnessed €106 billion being received (in guarantees, bonds and cash). The Greek banks with the second package will receive €48 billion for refinancing.

Also the ECB lends to banks at 1% while the Greek Government borrows at more than 4%. The Government reduced the taxation rate in limited companies from 24% to 20% without controlling and addressing tax evasion. Tax evasion is estimated to be around €30 billion annually.

Referring to the effects of the austerity measures against the working class, the numbers are stark!

  • Unemployment rate in Greece was 19.9% in November of 2011 compared to 10.6% in Eurozone.
  • The fourth quarter of 2011 there was a contraction of 7% in Greece (0.7 growth in Eurozone)
  • More than 20.000 homeless people in Greece (100% increase from 2006)
  • 27.7% of the population (3million people) live at the Edge of Poverty Line (2010 data from Eurostat)

All predictions by the EU, the IMF and of the Greek Government have been proven wrong. At best, Greece will have 117% debt to GDP if the Private Sector Involvement (PSI) succeeds! The majority of the mass media in Europe including a lot of Governments around Europe have created the myth that the inefficiency of measures in the Greek economy is due to the laziness of Greek people and not due to the austerity policy.

The crisis does not affect those who have exploited the state and public interest for decades but the majority wage and salary earners. The continuation of failed policies is not in the interest either of Greek society or of the EU and the European taxpayers. It is only in the interest of financial capital and of the speculators – Greek or foreign.

The combination of new loan packages and violent austerity is the same as throwing money into a bottomless pit. It has already led to a disorderly default which has affected the low and middle class in Greece (the rich have already sent their money abroad) as well as the European taxpayers (who will be expected to pay the bill of the resulting destabilization of the European bank system and of the losses of public pension funds).

The Bourgeoisie are running an experiment to test Greek working class tolerance. If the experiment succeeds then the misery of workers in Greece will be followed by the rest of the European working class. Solidarity among the people of Europe does not concern only the people in Greece it is also a resistance to austerity and to the imminent collapse of the welfare state throughout Europe. For this purpose, trade unions in Europe have to create a strong common front.

Nagia Nikolaou
Member of the Athens Labour Centre (EKA) Board

Further reading:

BBC News: “Greek recession deepens in fourth quarter.” — February 14th 2012

EUROSTAT: 27.7% Greeks (3million People), Live at the Edge of Poverty Line

Greek bailout gambles on mass privatisations, wage cuts — February 21st 2012

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