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Policies introduced in Greece exacerbated inequalities

01 April 15 | Tassos Giannitsis
Tassos Giannitsis

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The complete picture of the effect of the economic crisis on Greek households and the policies that were introduced, especially the way they exacerbated inequalities - sometimes within the same segment of society - is "extremely complex, often apparently contradictory and requires great care in interpretation," Tassos Giannitsis, coauthor of an innovative study said.

 

In a study for the Hans Boeckler Foundation released this month, Giannitsis, professor at the University of Athens and former minister, and Stavros Zografakis, professor at the Agricultural University of Athens, looked at income and tax data for the years 2008 to 2013. The study was widely publicized in European media as the first one to starkly set out the massive social problem created by the crisis in Greece.

"We do not proceed in our study to the rationale of pointing out what we think is wrong," Giannitsis explained. "We determined, based on Bank of Greece data, that wage cuts were on average much smaller in the narrow public sector compared to the business sector, but definitely greater at public utilities. We also determined that significant sections of public workers took back in various forms the paycuts that were imposed, that the great increase of pensioners in 2008-2012 came from the public sector and that workers in the private sector - beyond the significant revenue drop - were also tried by unemployment."

Giannitsis said that the picture of the Greek situation was very complex, with multiple realities. He cited as example the fact that "although the overall sense of inequality remained stable because of a generalised povertisation of all groups - to a different degree - inequalities in special social groups were exacerbated," especially in wage earners and incomes from business and entrepreneur activities.

"We found that within wage earners, some levels had lost 39 percent [of wages], some 7 to 9 percent, and others increased their wage income by 5 to 20 percent," he said. "Among pensioners, some lost 11 to 32 percent and others gained up to 12 percent." Income disappeared in other categories, some up to 54 percent, but that there were also categories that in general gained, such as those in the farming sector (by 26 percent). In the report, the authors cited the agriculture sector as "consistently enjoying a highly privileged tax regime."

Factors that the report said contributed to the inequality were "the privileged protection of the public sector and political clientele groups", the tolerance for "multiple forms of tax evasion and ways of dodging the fiscal burden," the exemption of advantaged social groups from taxation, and "the resistance of the political system against rationalization and reform."

Giannitsis said that the Greek economy faced problems because of its thin production base and weak competitive ability, which included weak technology, innovation, quality, specialised production, production plant size, and products that did not appeal to the global market, with the exception of tourism. The government needed to urgently focus on new forms of poverty, especially of young people with families and households with one or more unemployed people.

There are more than one solutions, he said, to the crisis, adding a note on European policy, "One can criticise European policy in many ways, but they cannot say that Greece did not benefit from its membership in the EU."

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