His country is no longer “the black sheep of Europe,” said Mitsotakis of the conservative Nea Dimokratia (ND) party, commenting on the Eurogroup’s announcement in June that it would end increased surveillance. The measure was confirmed by euro area finance ministers and approved by EU financial commissioner Paolo Gentiloni. According to Greek Finance Minister Christos Staikouras, the decision honors “the great sacrifices made by Greek society”. Greece has successfully implemented most of the requested reforms – and in the face of considerable protests from the population.
In the latest EU Commission follow-up report from May 2022, the country attests that it has taken the “necessary measures” despite the difficult situation caused by the pandemic and the effects of the war in Ukraine. Economic growth has also been well above the eurozone average in recent quarters – but the country’s situation is far from brilliant.
Portal/Alexandros Avramidis Greece “is no longer the dark axis of Europe”, according to Prime Minister Mitsotakis
Visible consequences of strict savings targets
At 189.3% of gross domestic product (GDP) in the first quarter of 2022, the national debt was still by far the highest of any EU country. Even though banks are reporting great progress in reducing credit risk, institutions’ capital base is weak and the proportion of non-performing loans is still high at 12.8%.
For the population, the years of relentless austerity policy had clear and perceptible consequences on a daily basis, for example in the form of extremely reduced health care. While unemployment is currently around 12% – after nearly 30% in the meantime – around the same level as before the 2010 debt crisis, it still ranks high in a European comparison. Furthermore, the recovery of the labor market is based on the post-pandemic tourism boom.
Under the rescue parachute
Greece asked for international help in 2010, just before its financial collapse. In the years that followed, Athens received billions in loans subject to stringent austerity and reform requirements. In total, the euro rescue fund ESM and its predecessor EFSF transferred more than 200 billion euros to Greece. Loan repayments are scheduled to occur from 2034 to 2060.
Permanently damaged job market
Due to pressure to save, collective agreements were canceled and workers’ rights severely restricted. The fact that the minimum wage for full-time work only increased in May from €663 to €713 in the wake of high inflation resulting from the war in Ukraine does not help many: nowhere else in the EU does the number of full-time workers involuntary partial as large as in Greece, many people work in precarious jobs.
The example of tourism makes the misery clear: despite high unemployment, according to the Instituto de Pesquisas Turísticas (INSETE), a fifth position in hotels and restaurants could not be filled this year – working conditions and salary levels are very bad, especially on the islands.
According to data from the Greek statistical authority (ELSTAT), in 2021 one third of the inhabitants of Greece were at risk of or affected by poverty. Many – especially young people – with higher education qualifications have emigrated in recent years due to poor prospects. According to the EU report, this brain drain is also slowing medium-term growth prospects and becoming an increasing burden on social systems.
Inflation and high energy prices difficult to manage
Both salary levels and pensions in Greece – unique in the EU – are significantly lower than they were twelve years ago. At the same time, however, new taxes have been introduced – such as a greatly expanded property tax – that place an additional burden on many families. The currently high inflation of 11.6% and high electricity and fuel prices are hardly manageable for many. Like many other countries, the government of Prime Minister Mitsotakis has already launched first aid programs and announced more.
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A chronology of the financial crisis
With the end of the tightening of supervision, Greece can now expect a payment of 748 million euros. These are the price gains that the European Central Bank (ECB) and national central banks have made with back-up purchases of Greek government bonds.
Another tranche is expected to be approved at the end of October, provided Athens implements new steps of reform that have not yet been completed. In addition to dismantling old bureaucratic structures with a large digitization package, this includes the establishment of new structures, for example in the area of tax administration and other privatizations – sometimes very controversial.