Is Greece becoming the EU’s ‘Third World’?
Dear Member,
This is our weekly round-up from Greece.
Greece has the lowest average annual wage in all EU countries and ranks last with a negative figure for disposable income. According to the OECD, the country is 3rd from the bottom in average wages among 35 countries and has the 7th highest average working time. It doesn’t sound good, right?
The 2024 budget was submitted to Parliament. Some extra 2 billion are to be collected from taxes, while very little extra funding is provided for hospitals and education. Also, public debt is expected to drop to 152.3% of GDP in 2024 from 160.3% of GDP this year (It was far lower when Greece was told it should go under structural adjustment, remember?)
SYRIZA is ‘game over.’ The main opposition party is disintegrating as nine more MPs, an MEP, and dozens of members from its institutions are breaking from the party. New leader Kasselakis isn’t doing well at all, and it’s also depicted in polls.
But, first, let us tell you about the Allied Grounds project
On October 5, 6, and 7, the “Allied Grounds” conference brought together scholars, activists, and cultural workers from more than 25 countries at the House of Democracy and Human Rights in Berlin. It was the culmination of Berliner Gazette's annual project to explore the ecological dimension of work and the means of re/production as the means of climate production. The great thing is that all results are available on an open-access multimedia site in the form of texts, audio, videos, and projects. Take a look here (Opens in a new window).
Low wages, no savings, high working hours, high housing costs
Greece has the lowest average annual wage in the EU.
In 2022, the average annual wages ranged from €73,642 in Iceland down to €24,067 in Greece, Statista concluded (Opens in a new window) this week with findings published by Euronews Business.
The highest-paying countries in 2022 were Iceland (€73,642), Luxembourg (€72,529), Switzerland (€67,605), Belgium (€63,758) and Denmark (€59,405), whereas the lowest payers were Greece (€24,067), Slovakia (€24,337), Hungary (€26,376), Portugal (€29,540) and Czech Republic (€30,967).
That is, Greece ranks lower even than countries that were struggling after the collapse of the Soviet Union.
Eurostat said the average hourly labor cost in the EU was €30.5. Average annual salaries for single employees without children were €26,136. Working couples with two children clocked in at an average of €55,573 yearly.
Why are salaries so low in Greece compared to others?
“Greece’s overall economy and labor market is still struggling to recover from the sovereign debt crisis, leading to average salaries and minimum wages being far lower than the rest of Europe. Several more stringent labor market measures have also been implemented recently, such as drives to hire younger, fresh graduate trainees, who can be paid less,” Euronews Business reported.
According to another Eurostat report (Opens in a new window) published this week, in 2022, people in the EU saved on average 12.7% of their disposable income.
Greece also ranked last with a negative -4.0%, after Poland with a registered -0.8%—the only two countries with a negative rate.
The highest gross saving rates were recorded in Germany (19.9%), the Netherlands (19.4%) and Luxembourg (18.1%)
According to OECD’s 2022 data (Opens in a new window), also published this week, Greece has the 7th highest average working time among the 38 countries of the Organisation but is also 3rd from the bottom in average wages.
According to the same data, Greece ranks 34th – out of 35 countries – with an average weekly salary in the country estimated at $ AUD 761.60 (456.31 euros). The average hourly wage in Greece is $AUD 20.98 (12.58 euros). Mexico is the only OECD country with a lower hourly wage of $AUD 11.41 (6.87 euros). The highest weekly wage is recorded in Iceland, at $AUD 2328, much higher than all four of its Scandinavian neighbors; Icelandic workers earn – on average – nearly $AUD 83 per hour. Comparison with Greece is simply non-existent.
In terms of working hours, only four of the 35 have longer working hours per week than Greece, with an average working week of 36.27 hours: Israel (36.38 hours), South Korea (36.56 hours), Chile (37.75 hours) and Mexico (42.81 hours).
On top of all that, according to the European Trade Union Confederation report (Opens in a new window)published last week, real wages in Greece have been reduced by 0.2% in 2023 while business profits have skyrocketed by 5.9%. According to the same report as reproduced by Oikonomikos Taxydromos, Greece ranks among the nine member-states where real wages decreased, but real profits increased. Moreover, in ten member-states, the real profits increase was higher than the actual wages increase - including Greece.
Bonus: Greece also leads Europe in housing costs (Opens in a new window), November’s Financial Stability Report by the Bank of Greece (BoG) maintains. According to the report, 27 percent of the Greek population is spending more than 40 percent of their disposable income to cover housing costs.
2024 Budget submitted: Tax revenues increase by 2 billion
Greece’s 2024 budget was submitted to the Parliament on Tuesday morning and is expected to be discussed in the plenary session from 13 to 17 December.
The budget’s key figures, as reported by Reuters (Opens in a new window), are:
The economy is expected to grow faster in 2024 due to strong projected tourist inflows, higher investment, and domestic demand.
Economic output is expected to rise 2.9% next year following a 2.4% expansion this year, partly with the help of European Union recovery funds.
Greece expects to receive more than 55 billion euros from EU structural and recovery funds by 2027, which economists estimate will contribute to 1 percentage point in growth annually.
Investment is seen growing by about 15.1% in 2024, more than double compared with this year.
In 2024, a primary budget surplus of 2.1% of gross domestic product is expected to be achieved (which excludes debt-servicing costs and is crucial for debt sustainability).
There will be pay raises for civil servants and pensioners and a 600 million euros reserve for natural disasters, partly covered by a special levy for hotels.
The government expects public debt - the highest in the eurozone - to drop to 152.3% of GDP in 2024 from 160.3% of GDP this year.
The annual inflation rate is forecast to drop to 2.6% by the end of 2024 from 4.1% this year.
Unemployment is also seen declining to 10.6% next year from 11.2% in 2023.
The government also expects to raise 5.77 billion euros from state asset sales in 2024.
Now, let’s look closer into some of these aspects.
For the surplus to grow from 1.1% this year to 2.1 in 2024, it will need an extra 2 billion euros. Thus, revenues from taxes are expected to rise by 2 billion euros (Opens in a new window). According to reports, the rise in taxation for freelancers (which we analyzed in a previous newsletter) is expected to bring some 600 million euros.
The VAT will remain low (if 13% is considered low) in tourism, culture, sports, and transportation, but it has been announced it will increase for refreshments and possibly other items in the coming months.
Spending will slightly decrease in 2024. However, 400 million euros will be given to the hospitals (Opens in a new window) to cover their needs and also to pay their due debt to private businesses. Their total revenue is expected to increase to 4,355 million euros, an increase of 490 million from 2023.
It should be noted that public hospitals debt to providers has skyrocketed in the last five years: It was 1.4 billion euros (Opens in a new window) as of September 2023 (from 0.3 billion euros in December 2018, that is pre-pandemic) and is expected to be 1.3 billion by the end of the year. The amount breaks down to 661 million for medicine and 652 million for other expenses.
It is important to note that on 16 November, the European Commission referred Greece, along with Belgium and Italy (Opens in a new window), to the Court of Justice of the European Union for not correctly applying the rules under the Late Payment Directive (Directive 2011/7/EU). The Late Payment Directive obliges public authorities to pay their invoices within 30 days (or 60 days for public hospitals). Specifically, in the case of Greece, the Commission is referring it to the Court of Justice due to excessive payment delays by public hospitals (both civil and military) to their suppliers. The Commission launched the infringement procedure in 2019.
As to the budget again, there would be 100 more million euros for education, which is considered a low amount in relation to the needs.
Public employees' wages are expected to increase for the first time in the last 14 years - 1,476 on average for a year. Pensions are also expected to increase by 3.05%.
The budget will include 352 million euros in ‘social solidarity allowance’ for vulnerable households.
Public and private investment is expected to rise by 12.1%, yet some analysts doubt this (Opens in a new window) given that the forecast for 2023 was 15% and it will only be 8% by the end of the year.
Inflation is also forecasted to remain higher than the 2% threshold set by the EU - from 3.9% in 2023, it is expected to drop to 2.6% in 2024. This means high prices will persist.
Plus, a record year for revenues from privatizations is expected in 2024 (Opens in a new window). The state budget foresees revenues of 5.770 billion euros.
However, privatization is a one-off revenue for the state, which sells primarily not very lucrative businesses that otherwise would generate a steady flow of revenues for the state.
It has been a typical practice of successive Greek governments to leave a public enterprise to decay, which in turn would trigger citizens’ anger, who would then accept more efficiently for the enterprise to be privatized - “to finally work properly.”
Apart from the long-term loss in state revenues, it has also been proven that privatization doesn’t necessarily mean companies will work properly.
A prominent example is Greece’s railway company, TRAINOSE, which was sold in 2017 under the SYRIZA government to FS Italiane Group for as low as 45 million euros. The company was then named Hellenic Train. The tragedy of the Tempi train crash on 28 February 2023, where at least 57 people were killed, marked the country. Of course, a share of responsibility also lies with the state as the tele-administration system was not in place, and this appeared to be part of the state-run part of the company OSE.
However, in March, OSE Union head Nikos Tsikalakis stated (Opens in a new window) that one should look for the Tempi tragedy's causes of
" underfunding and lack of transparency in TRAINOSE privatization contract.” “Six years after the privatization, there is no corporate contract between OSE [state part of railway] and TRAINOSE [privatized part], in which obligations and rights of each company to be clearly outlined.”
On Wednesday, a train with 72 passengers was derailed (Opens in a new window) in Patra. Luckily, no one was injured.
While the railway is most obviously in tatters (Greece’s entire railway network is expected (Opens in a new window) to be fully restored only by 2025), it was reported (Opens in a new window) on Wednesday (same day with the derailment) that Hellenic Train was expected to ask 15 millions more in compensation by the Greek state for covering ‘unpopular’ routes in 2022. The compensation was set at 50 million euros annually. Yet, it will be increased to 65 million “due to the favorable conditions of the same contract which was signed by the previous leadership of the Infrastructure Ministry,” it was reported.
And that’s just an example of how ‘beneficial’ privatizations have been for the state budget and the Greek citizens.
SYRIZA: That’s all, folks
Developments in the main opposition, SYRIZA, are stormy.
Νine lawmakers announced on Thursday morning that they broke away from the party seeking to form their own parliamentary group. These were Efi Achtsioglou, Nasos Iliopoulos, Alexis Haritsis, Sia Anagnostopoulou, Hussein Zeybek, Dimitris Tzanakopoulos, Meropi Tzoufi, Ozgur Ferhat, and Theano Fotiou.
In the early afternoon, MEP Dimitris Papadimoulis announced his departure from the party.
The fraction departure follows the mass resignation on Wednesday of 90 members (Opens in a new window) of the Human Rights Sector of SYRIZA and the majority of its Secretariat.
SYRIZA now has 36 lawmakers, while the independents coming from the party are 11.
The so-called 6+6 fraction group, led by former Labour Minister Achtsioglou, published a relevant statement signed by 57 members of the party’s Central Committee (including the lawmakers).
In this statement, the group said the party is experiencing a “dissolution crisis” and accused new leader Stefanos Kasselakis of “anti-democratic practices.”
“The new president of the party and his leadership group refuse to recognize and discuss the political core of the problem. Instead, they choose the interpretive scheme of the ‘enemy within’ and the ‘fifth column.’ When they do not choose to launch attacks and insults, they resort to a simplistic, empty speech with generic slogans,” they wrote.
The group accused Kasselakis of “acting undemocratically,” saying he was elected democratically but did not act accordingly. His message is “a jumble of contradictory opinions without any depth,” the fraction stressed.
“I think what’s happening is degradation and grotesque,” said the first SYRIZA (then SYN) president, Nikos Konstantopoulos, in an interview (Opens in a new window), referring to the new party leader Kasselakis. He stated that
“whatever exists in SYRIZA at this moment is controlled by Tsipras. Who controls it in parliament, its finances, and communication? Mr Tsipras. Mr Kasselakis is playing the role he has chosen or thinks he can play. Tsipras is responsible for orchestrating this ugly situation that is unpleasant for anyone. It’s a disgrace.”
Meanwhile, SYRIZA continues its free fall in the polls. In the latest one by Prorata (Opens in a new window), published on Tuesday, SYRIZA ranks 3rd along with Communist Party KKE.
Specifically:
ND 34%
PASOK 12%
SYRIZA
KKE 10.5%
Greek Solution 4%
Plefsi Eleftherias 3.5%
Niki and Spartiates 2.5%
DiEM25 2%.
Kasselakis has a group of dedicated fans (they mostly behave like fans on social media), yet the controversy over him prevails. Many of his statements are widely debated on social media. Like a recent one, during the Thessaloniki 2023 Summit, he said (Opens in a new window) the new attitude he brings is a
“return to old, tidy Greece; That Greece where the landlord had his home clean, he was abiding by rules and laws, and cared for his neighbor.” He also said (Opens in a new window) that he has “clean hands and international experience and will bring breakthroughs.”
While these statements point to a rather conservative politician, not a progressive, let alone a leftist one, Kasselakis has also attacked the politics of the Tsipras government. He said (Opens in a new window) the Memoranda era was the era when SYRIZA was governing with men like Tsakalotos and Katrougalos [two Tsipras’s key ministers]. “This era is over.”
To be continued.
Read
Greece - Some structural macroeconomic arithmetic (Opens in a new window)
Hit by floods and fires, a Greek village has lost hope: (Opens in a new window) Sesklo, home to one of Europe’s oldest prehistoric settlements, has survived natural disasters through the centuries.
Greek floods and fires expose Europe's frail climate defences (Opens in a new window)
Athens is cutting down trees in Exarcheia to make way for a subway (Opens in a new window)
Rhodes: Heavy rainfalls flood the island, cause landslides (Opens in a new window)
‘Fire on fire’: how migrants got blamed for Greece’s devastating blazes (Opens in a new window)
Labour minister creates confusion about retirement age increase (Opens in a new window)
Hundreds of self-employed and freelancers protest new tax bill (Opens in a new window)
Greece tables draft legislation expanding ‘Hercules’ program to reduce NPLs (Opens in a new window)
Greece sees record arrivals in January-September (Opens in a new window)
Tilda Swinton in Athens performance “Embodying Pasolini” (Opens in a new window)
Cavafy Archive opens in downtown Athens (Opens in a new window)
New Museum in Athens Highlights Modern Greek Culture (Opens in a new window)
That’s all for this week,
Stay safe!
The AL team
