Fourteen years after a debt crisis that saw Greece nearly crashed out of the euro, single parent Niki Klaoudatou says she worries more about money now than she did during the worst years of the country’s economic meltdown.
Ahead of an election on May 21, a cost-of-living crisis that is eroding earnings is foremost in voters’ minds. For Klaoudatou it means voting for anyone but the incumbent conservative New Democracy or the opposition leftist Syriza.
“I’m going to vote for a small party, more to show that I am not happy with the bigger parties,” she said, echoing opinion polls that suggest the outcome will be a hung parliament.
Three international bailouts saved Greece from toppling out of the euro zone during a decade-long debt crisis that peaked in 2015. But austerity imposed in return for financial aid meant millions of Greeks saw their livelihoods hit as taxes soared and wages and pensions were recalibrated.
It was a painful adjustment to get the country’s finances back on track. Since its bailout programme ended in 2018, Greece has regained market access, wrestled down its record debt and growth is set to outpace the euro zone’s average.
For many, however, that turnaround is only on paper.
Now aged 40 and a telephone company employee, Klaoudatou is earning the same money – 850 euros a month – she did as a 20- year-old supermarket worker in 2004.
With a mortgage, two young children and spiralling food bills, she says can’t afford the basics.
“Εven during the crisis – and this is the joke – I didn’t think so much before spending a single extra euro,” Klaoudatou told Reuters.
DOUBLE WHAMMY
While millions across Europe are struggling with rising prices, especially for energy and food, the financial turmoil of the last decade has amplified the impact in Greece.
“The past 10 years has been static for workers and pensioners. Any improvement in growth hasn’t been passed on to them yet,” said Vlassis Missos, fellow researcher for the Greek Centre of Planning and Economic Research.
A GPO poll on May 6 showed the ruling conservative New Democracy was set to get 36.9% of the vote on May 21, compared with 30.4% for leftist Syriza, its main rival. However, smaller parties including the once-dominant Socialist PASOK, were also gaining ground.
Prime Minister Kyriakos Mitsotakis has raised the minimum wage and pensions, and promised to do more if re-elected.
His main rival, leftist Alexis Tsipras who governed over the 2015-2019 period, has also pledged to raise pensions and the minimum wage, and to index wages to inflation.
Greece may formally be out of fiscal surveillance by the European Union, but its heavy debt burden continues to make lenders wary.
That means any administration must undertake a perilous balancing act of placating an electorate worn down by austerity and now inflation with keeping markets happy.
There is little wiggle room.
“From a fiscal point of view, we’re still a way from a primary (budget) surplus which is necessary for the long-term debt sustainability,” Greek central banker Yannis Stournaras told media outlet Imerisia.gr on May 10.
PAYCHECK BARELY GETS TO PAYCHECK
One in two Greek households could barely get by on their monthly income last year.
Eurostat, the EU’s statistics agency, says 36.4 percent of Greeks had overdue bills in 2021, the highest proportion in the 27-member bloc. The share of people whose housing costs represent more than 40 percent of their disposable income was also the biggest in the EU, at 32.4% of Greek households compared to an EU average of 10.4%.
And in the past year, those bills have been getting higher as the European Central Bank raises interest rates at a record pace to rein in runaway inflation.
Klaoudatou, who shares a small apartment in the Athens suburb of Alimos with her two children and her mother, has seen her mortgage rise to 450 euros a month, 100 euros more than a year ago.
She shares expenses with her mother, who receives a monthly pension of around 850 euros. But still the family cannot make ends meet.
Klaoudatou only uses her car when strictly necessary, and recently had to tell her 12-year-old he couldn’t go out with his friends because she couldn’t afford the food.
“I felt bad. Really, really bad,” she said. “I would never have done that before.”
NEW DEMOCRACY
Prime Minister Kyriakos Mitsotakis’ conservative party says he will maintain strong growth and boost wages, to bring them close to the European Union average.
New Democracy says:
– Greece can regain an investment-grade credit rating, achieve medium-term growth of 3.0% and cut public debt to 120% of GDP by 2030 from 171.3% now. It targets inflation of 2.0% in 2025 from 4.5% now.
– The average wage will be raised by more than 25% in 2023-2027, to 1,500 euros from 1,170 euros, with the monthly minimum wage rising to 950 euros from 780 euros. Public sector wages will also be raised by an unspecified percentage from 2024. Pensions will be raised by 3.4% from Jan. 2024.
– Unemployment will fall below 8% by 2027 from 12.7% last year. Social security contributions will be cut by one percentage point.
– Α business tax on the self-employed will be gradually reduced, by 20% in 2025 and 30% in 2026, before being scrapped by 2027.
– The tax-exemption threshold will be increased by 1,000 euros in 2024 to 10,000 euros for households with children.
– Renewables will account for about 80% of power generation by 2030 from about 40% now.
New Democracy says its 2024-2027 programme costs 9.1 billion euros in total and has been budgeted.
SYRIZA-PROGRESSIVE ALLIANCE
Firebrand leftist Alexis Tsipras, prime minister in 2015-2019, the peak of Greece’s debt crisis, says his Syriza party will increase wages and pensions and protect workers.
Syriza plans in its first 50 days in power to:
– Increase the monthly minimum wage to 880 euros from July 1, 2023 and reinstate collective bargaining. It says the minimum wage will be raised annually along with inflation.
– Scrap labour market flexibility and reduce working hours to 35 from 40 per week.
– Immediately increase public sector wages by 10%.
– Reinstate an annual bonus pension for pensions up to 500 euros and raise all pensions by 7.5%.
– Increase the tax-free threshold to 10,000 euros from 9,000 euros currently.
– Cut value-added tax on food products to 6% from 13% and scrap a sales tax on essential goods, such as milk and bread. Reduce a levy on fuels, heating oil and natural gas to the lowest rate in the European Union.
– Suspend auctions of primary residences for properties valued at up to 300,000 euros, until it bans such foreclosures.
– Impose a cap on profit margins in the energy sector and tax energy producers and refineries’ windfall profits. Reduce charges paid by electricity consumers and protect the vulnerable from power cuts due to arrears.
– Decouple power from gas prices.
– Write off part of the arrears owed to pension funds after the pandemic and allow debtors to pay off the rest in 120 instalments.
– Part-nationalise Greece’s power utility Public Power Corp and transfer the stakes in two water companies held by the country’s sovereign wealth fund to the state.
– Abolish Greece’s bank rescue fund HFSF and transfer the stakes it holds in the country’s four largest lenders to the state. Take over management control of one of the four banks.
– Gradually raise tax on dividends above 50,000 euros to 15%.
– Scrap a business tax on self-employed workers.
Syriza puts the cost of its plan at 5.5 billion euros annually, saying that it expects elevated revenues from taxing energy companies’ windfall profits.
