A group of people having lived in
Myth 1: Debt crisis occurred because
The Greek debt crisis is often attributed to the country’s ‘bloated public sector’. To start with, Greek public expenditure as a percentage of
A large part of the financial press attributed the crisis to ‘excessive’ government wage expenditure as a percentage of
Irrational public spending on armaments has always been there, and therefore it cannot be held liable for the deficit crisis; it is however one of the factors that have deteriorated the country’s finances. Some German and other politicians that have complained about the ‘excessive solidarity displayed towards Greece" miss the point that their own countries are at the same time depending on the Greek military spending to support their military industries.
The current deficit is mainly due to the inability of the state to generate tax revenues, rather than due to increased spending. The reduction of corporate tax rates and the illegal tax evasion by big corporations and wealthy individuals has brought the Greek deficit at its present heights: it is estimated that €20 billion are still owed today to the Greek state by no more than 8,000 persons and businesses recorded to have committed tax fraud. This is twice the amount of debt that
Structural weaknesses of the Greek economy exposed it to speculative attacks. But who is to blame for these weaknesses? The continuous austerity regimes of the last decades, also linked with the European liberalisation agenda and the country's entry into the Eurozone, have led to a superficial and short-term development rather than a real one. "Development" was supported by sectors with no long term perspectives, like transportation of commodities and selling away public property, to the interest of a small Greek elite. The Greek governments' obscure reporting of Greek public finances is also to blame. But they were not alone on this: the mess has been created in cooperation with global banks like Goldman Sachs, which was hired as a consultant by the Greek Government, and is now under legal inquiry in the
The defiicit crisis took its gigantic dimensions only when speculators chose
Myth 2: Greeks have been partying, living beyond their means, lying about their figures, and now they are asking other European nations to help them
According to the OECD, Greeks are the most hard-working people in its member countries (with the exception of Koreans). The average Greek worker works 2,120 hours per year - 690 more than a German worker.
Average salaries in
Do Greek households spend more than they earn by borrowing a lot? Statistical data show that German households owe more money than the Greek ones do, while Greek private consumption per inhabitant is lower than the EU average.
Greeks are not a homogeneous mass.
Myth 3: The IMF-Euro zone loan is helping the country and its people
First of all, the IMF/EU program (particularly the EU portion) is no “aid” or “rescue”, or even “bailout”, as the IMF, the EU and various commentators claim. It consists of a series of loans, with draconian conditionality and the standard interest rate which is charged by the IMF in all cases. As for the EU portion of the loan, it has been given at the extra-high 5-6% interest rate, when the country’s
Secondly, this loan was not offered to help the “Greek people”. It was offered to guarantee that French, German and Greek bankers won’t lose their money, that the Euro is saved, and to ensure that the crisis does not spread to other economies, as it is clearly stated elsewhere in the relevant IMF document.
Here is the impact of the IMF - Euro zone ‘rescue plan’ on Greek people:
1) Abolition of holiday and leave compensations (‘13th and 14th salaries’) to the employees of the public sectors and the pensioners of both the public and the private sector
2) All salaries remain frozen while VAT has increased by four per cent
3) Minimum salary for the first entrants in the labour market is reduced from 700 Euros to almost 500 Euros
4) The limit for group dismissals has been increased from 2% to 5% and the corresponding compensation reduced by 50%
5) Collective labour agreements can be breached if the employer considers it ‘indespensible’
6) A large number of public services, including the railway and water supplies, will be privatised
7) Health and education budget cuts
8) Retirement age for women increases from five to seventeen years under the argument of gender equality
Economists estimate that this measures will result in an overall 25% decrease in living standards. Additional measures are expected to be taken, like expanding explicit [M3] [Y4]and nominal salary cuts in the private sectors and introducing a basic pension of 360 Euros.
Myth 4: Other EU Member States don’t risk facing similar situations
Austerity measures are already being imposed in:
Herman Van Rompuy, the President of the European Council said that Euro zone reached the edge of being dissolved but it was saved by France’s and Germany’s decision to move on to austerity plans and the liberalisation of the labour market. This will mean a massive degradation of living standards all over
Belgian debt is growing by 45 million Euros a day. The word ‘austerity’ was a bit of a taboo during the elections campaign. Nevertheless, in recent history (1993), deficit crisis have been resolved with a general increase of the VAT. Belgians should be vigilant to prevent the expansion of this pan-European anti-social wave in their country and defend their living standards.
Myth 5: Demonstrators in
Hundreds of thousands of people have been demonstrating peacefully in
The debt of most EU Member States will sooner or later have to be restructured because it is unsustainable. The question is in what terms this will be done. Will we prioritise saving the private banks with public money or defending the Europeans’ social rights and well-being?
 ETUI: Open letter to European policymakers: The Greek crisis is a European crisis and needs European solutions
TARKI EUROPEAN SOCIAL REPORT – Income distribution in European countries: first reflections on the basis of EU-SILC 2005