Giannis and Lena, both in their early 30s and with MBA degrees, consider themselves lucky to be employed. Living in Thessaloniki, Greece’s second largest city, located in the heart of Macedonia, Giannis is a merchandise buyer at a company that imports household items. Lena works in the export department of a pasta-producing enterprise.
“Every Greek family is experiencing the crisis their own way,” Lena tells me. “Unemployment, wage and pension cuts, taxes, and increases in prices of basic goods have caused despair to millions of people.”
Giannis shares a bit more. His family’s income has taken a real hit. His father’s wages have been reduced by one third and his mother got laid off three years ago. She used to work at a ready-made garments factory that went bankrupt soon after. For a year and a half, she hasn’t been paid and she is still claiming the money she is owed.
Like so many others, Giannis had been unemployed for years. There was nothing he could do other than hope to get accepted at one of the five-month temporary work programs in the country funded by the EU. “You’re being deprived of the opportunity to work during the most productive years of your life,” Giannis tells me as he explains the psychological burden of unemployment. “There’s a feeling that you’re standing still even though the whole world keeps moving and after a while you feel numb. You accept that’s how things are and you are unable to get out of the rut.”
Sticking with Austerity
For six years now, Greece has lived under unprecedented austerity policies demanded by its lenders and accepted by a succession of governments. The social and political reality created by austerity was demonstrated sharply by two events on the same day in October 2015.
First, Eurostat, the European statistical service, released a report on poverty and social exclusion in Greece. The report showed that, in 2014, 22.1% of the Greek population lived in conditions of poverty, 21.5% were severely materially deprived, and 17.2% lived in families with very low work intensity. (Economists define “work intensity” as the total number of months that all working-age household members have worked as a percentage of the total number of months they theoretically could have worked. Households under 20% are considered to have “very low” work intensity.) Altogether, 36% of the population faced one or more of these terrible conditions. That percentage was 7.9% higher than in 2008.
Second, the Greek parliament approved a new piece of legislation imposing further austerity measures as demanded by its creditors—primarily the European Union (EU) and the International Monetary Fund (IMF)—to meet the terms of Greece’s most recent (third) bailout agreement. The new package involves cutting public spending by 14.32 billion euros, while raising taxes by 14.09 billion euros, over the next five years. The measures will primarily affect privately-owned businesses, homeowners, and employees close to retirement.
Austerity policies were first adopted in 2010 as a “solution” to the economic crisis that erupted in 2009–10. Severe cuts in public spending, deep reductions in wages and pensions, enormous tax increases, and a stripping back of labor protections were imposed—ostensibly—to stabilize the economy and gain the confidence of financial markets. In practice, the measures have plunged the Greek economy into a prolonged recession that has led to the disastrous results outlined by Eurostat. Unfortunately, the current Greek government, formed by the left-wing SYRIZA party, appears determined to keep the country on the same path.
The Crushing Burden of Unemployment
In the course of the recession, the Greek economy has shrunk by more than 25%. At present, more than one out of four workers is unemployed (one out of two among the nation’s youth), and more than one million jobs have disappeared. The prospects for improvement, given the austerity policies imposed under the third bailout agreement, are dim at best.
“No legislation can guarantee even the most basic labor rights,” Lena says in describing the way employers have used the specter of unemployment to further reduce wages. “It’s no wonder,” she adds, “that so many well-educated young people choose to leave the country.”
Since the unemployment rate for people with higher education is nearly 20%—the highest in the world—more than 200,000 young Greeks have left the country in search of better opportunities abroad. I discussed Greece’s brain drain with Victoria, 18, a first-year electrical and computer engineering student at the University of Thessaly. “Don’t be mistaken,” she says, “all those young people that seek a better life abroad care deeply for Greece and won’t hesitate to return once things have improved.” Victoria herself is already considering leaving Greece once she finishes her studies. Who can blame her? She is highly unlikely to find a job in her field after graduation.
ENKLO: Life, Death—and Rebirth?
A case in point of Greece’s manufacturing decline is provided by United Textiles (ENKLO), a 140-year-old company operating in Central Macedonia and Thrace with a strong presence in international markets, a skilled workforce, advanced technology, and excellent product quality. The company closed down in 2009, sinking under a debt burden of 350 million euros due mostly to poor management decisions and the expansion of its business activities beyond the textiles industry.
Ever since its shutdown, the laid-off workers, unable to find other jobs and refusing to accept that the company would never operate again, have been maintaining the equipment and guarding the buildings in order to prevent theft. “We are here night and day to make sure that the machines remain unharmed,” says Petros, who has worked as an electrician for 25 years.
Instead of the scheduled liquidation of the company’s property, the workers now propose its revival by converting its debts into stockholders’ equity, taking advantage of the country’s bankruptcy code. It is an ambitious business plan that aspires to utilize the existing equipment and the invaluable expertise of the workers.
No public funds are needed to re-start production. All that’s required is a government intervention that would settle any legal complications that may arise. With the government’s support, Petros argues, the company could operate the very next day.
Collapse of Production
Austerity policies have also led the country’s productive sector to near collapse, with industrial production in 2015 down by a staggering 35% compared to its level in 2008. Industrial production currently represents less than 10% of Greece’s GDP, an exceptionally low level historically for the country, as well as for the Eurozone today.
To be sure, the deindustrialization of the Greek economy started a lot earlier, in the early 1980s. The country’s new development model, after its integration into the European Community and the emerging Single Market, systematically favored the tertiary (services) sector and ignored the primary (agriculture, mining, etc.) and secondary (manufacturing) sectors. Greek industries, accustomed to the heavy protectionist measures of the post-war period and poorly prepared for the requirements of market integration and the liberalization of trade, failed to adapt. The massive influx of European funds to the tertiary sector (mainly tourism) shaped a services-centered economy (the services sector contributes over 80% to the country’s GDP), while weakening the country’s competitiveness and contributing decisively to the dismantling of its industrial base.
Things got immeasurably worse after 2009. During the recession, about 250,000 small and medium-sized enterprises have closed down. Many more have been forced to the verge of closure due to reduced revenues and increased financial obligations to social security funds, tax offices, and banks. Thousands of small business owners have opted to relocate to neighboring Balkan countries, which offer lower labor costs and corporate tax breaks.
“Reality has shown that the austerity measures applied across Europe are not the most effective response to the crisis,” says Costas, a civil engineer from Patra, Greece’s third largest city, in the southern region of the Peloponnese. Costas is 45 years old and a former member of SYRIZA, the current governing party. “No other country in the Eurozone has had to impose such far-reaching austerity programs,” he says, “and I just don’t see how Greek society can sustain the burden of yet another bailout.”
The policy is simply not working, even on its own terms. After five years of austerity and three bailout agreements, Greece’s national debt of 320 billion euros it right where it was in 2010. But its debt-to-GDP ratio has shot up to 175% (compared to 150% in 2010), and the European Commission projects that it will rise to 200% in 2016. The country’s destroyed economy will never be able to repay this huge volume of debt.
|Shuttered factory of ENKLO (United Textiles) in Naoussa, a once prominent industrial city. Now, with more than 50% of its population unemployed, Naoussa holds oneof the highest unemployement rates in Greece.|
U-Turn by SYRIZA and Popular Disillusionment
Originally elected in January 2015 on a vehement anti-austerity platform, Greek Prime Minister Alexis Tsipras subsequently made a complete U-turn. Ignoring the popular outcry against austerity, loudly expressed in a referendum on July 5, he has given in to the creditors’ demands. In August, SYRIZA and the creditors signed a new bailout agreement, including not only another round of austerity measures but also neocolonial restrictions on Greece’s national sovereignty. No legislation related to the objectives of the bailout, however minor, can be taken by Greece’s political institutions without the prior approval of its creditors. The creditors thus have the right to monitor the Greek government and to wield veto power over virtually all policy measures in Greece.
And yet, on September 20, Tsipras won a new election, again forming a government. The result seemed to vindicate his capitulation. It appears that Greek voters, confronted with a narrative presenting the new agreement as inescapable, opted to give the governing party a second chance. “This wasn’t a vote of hope,” says Costas, the civil engineer from Patra, “but a vote for the ‘lesser evil’ within the limits of a ‘nothing can really change’ mentality.”
Costas is even convinced that if there were another general election soon, the governing party would still emerge victorious. Greek voters appear to think that there is no credible alternative to austerity. “Ever since the PM marginalized any voices in SYRIZA that tried to show a different way and declared there was no alternative,” he says, “Greek society, having lost its morale, has come to accept its fate.”
Defeat and Apathy
To fully understand the popular mood, one must look at the abstention rates in the recent election. Turnout plummeted, with a record-high abstention rate of 45%. In addition, blank ballots reached an extraordinary 2.5%. The message is quite clear: the Greek people’s disappointment has led to a massive rejection of the political process altogether. Victoria tells me that most of her friends either cast a blank ballot or didn’t bother to vote at all since “they didn’t believe any of the existing political parties could actually make a difference.”
The low turnout was not an isolated incident. During the past few years, social unrest and frustration over the austerity measures have given rise to widespread discontent and large-scale demonstrations. But the decline of the struggle as unemployment began to bite and, especially, SYRIZA’s betrayal of popular hopes have led to a wholesale rejection of politics by broad layers of the population. The sense of defeat and indifference is pronounced among workers, and especially the young.
“Wishful thinking,” says Costas about SYRIZA’s hopes to overturn austerity by creating a domino effect in the countries of the European periphery. The balance of power has proven not that easy to change and now people feel that Greece is being punished for daring to question Europe’s neoliberal policies.
European Union officials have categorically ruled out any possibility of a debt write-down. Restructuring in the form of a lengthening of maturity or perhaps a lowering of interest rates is still on the table, but it would have very debatable long-term results. Greece would probably be given more time to get back on its feet, but this would not eliminate short-term financing problems. Besides, even though Greek aid loans are very long-term (over thirty years) and interest rates have already been lowered several times (lower than 1%), the country’s national debt is still considered unsustainable.
As for the SYRIZA government’s current promise to implement a “parallel” social program that would ease the burden of harsh new austerity policies on poorer Greeks, it has already been forced to withdraw the intended bill following severe objections by the country’s creditors. Many of the proposed measures lacked required budget-impact estimates. There were also concerns about the program’s compatibility with the conditions of the third bailout agreement. “Parallel” programs running alongside austerity measures are not what the EU has in mind, nor would they be possible to implement within the strict framework of the latest bailout.
The Prospect of Change
The only real question for Greece at the moment is: Could there be an alternative path?
Not everyone has given in to despondence and apathy. In a school building in central Athens, I meet Georgia, a young teacher and mother of three, who offers extra classes to underprivileged students free of charge. “People would take to the streets because they hoped they could make an actual difference,” she says. “Now it is clear that our hopes were false.” Nonetheless, she tells me, the economic crisis has made her more politically aware. She now chooses to spend much of her time and energy in political and social movements and social solidarity structures, where she can actually feel useful.
Popular Unity, a new political front including SYRIZA’s left wing, which split from the party by refusing to accept the new bailout, has so far offered the only coherent argument about how Greece could adopt an anti-bailout strategy. Its radical program includes the introduction of a new national currency, a deep national debt write-off, a lifting of austerity measures, and a restructuring of the productive sector and the welfare state. However, Popular Unity has so far failed to convince Greek voters, and did not gain parliamentary representation in the last elections.
Social injustice has spurred new modes of resistance far from political parties and trade unions. As the state becomes ever more hostile to the Greek people, many choose to self-organize by forming neighborhood assemblies and solidarity networks that support basic human rights, organizing micro-economies without middle-men, and setting up “solidarity clinics” providing free health care.
This is a period of reflection and finding alternative forms of resistance that could potentially be the basis for something new to emerge in the future. All hope is not yet lost that Greece may regain some economic stability and find a development policy in the interest of its people. “People feel exhausted, defeated and betrayed,” says Georgia, “but many refuse to give up.”