Can Europe Make It?

The forgotten grassroots voices of Greece

"We have good weather here in Greece and we are happy to have coffee for €1, sit and enjoy our leisure time with friends and family – but even this luxury is being taken away from us."

Carl Packman
11 August 2015

Graffiti in Athens. Photo taken by author.During the recent period of high-level negotiations in Brussels, European nations were gripped at what possible outcomes could result. Greek politicians going head to head with the troika raised many important questions about the state of Greek national debt. However in that time the impact of debt and job precariousness felt by real people were the stories we didn’t tend to hear as much about.

Many of us are well aware of the important figures, though. After receiving its first bailout in 2010 unemployment in Greece stood at 15%. The following year that figure was 21% and by 2014 it had shot up to a record high of 28% (and 60% of young people). All the while the minimum wage had been dragged down, private household debt soared, and, not surprinsingly, the economy as a whole shrank by 25% from 2007-14.

When I visited Athens recently to attend a conference on household debt with colleagues[i] from the Political Economy Research Centre at Goldsmiths, University of London, finding and listening to those stories was what I set out to do; to cut past the numbers and hear what people’s lives are actually like, and what campaigns and organisers are doing at the same time that Greek government officials meet eurozone leaders and creditors.

Wages, productivity, and debt

We spoke to Passas Costas and Nasos Koratzanis, representatives of the Γενική Συνομοσπονδία Εργατων Ελλάδας (General Confederation of Greek Workers), an amalgamation of 83 worker unions and 74 departmental secondary confederations, at their headquarters in Loulianou Street. They told us household debt levels have shot up between the years 2006-2013 – a debt crisis that is less spoken of in the context of Greece. In 2006, household debt as a percentage of gross disposable income was just below 60%, steadily reaching 72% when the financial crisis hit, before being just over 95% in 2013. Debt levels dropped a little after this point, from 2014 onwards, because of the way the economy suffered; but the context is important given the very dramatic rise.

While levels of household debt are admittedly higher in other countries across Europe – notably the UK – what is particularly worrying is the extent to which non-performing consumer loans (NPLs) have risen, meaning that people have got to a stage where they simply cannot find the means to service a loan. From 2002-2007 6.3% of all consumer loans were NPL’s, rising to 11.7% between 2008-2012. In 2013 this rose significantly to 31.9% and looking at the latest figures from 2014 it is 33.5%.

The diagnosis given by the union representatives is low wages. They reflected on the ‘Golden Age’ period before 1979 where productivity was high, as were wages. After 1979 - the stagnation period - wages failed to rise appropriately with the cost of living and taking on debts seemed the only option to maintain a decent life standard. Interestingly in 1993 – what they call the neoliberal age – both wages and productivity rose, broadly speaking. By the crisis period, from 2007 onwards, both wages and productivity dropped. With the introduction of the euro Greece lost its ability to devalue its currency so a rise in productivity was seen as the only way to bring wage levels up to the cost of living in the country. Due to a rapid shift in types of employment, from high to low-skilled labour and low wages, the productivity rise didn’t materialise.

To make matters worse wage cuts were seen by the last Greek government as a good way to restore economic confidence. Since 2010 wages have been gradually eroded to the point where today the gross minimum wage is around €586 – among the lowest in the eurozone. That wage for under-25s is €510. Earlier in 2015 the National Confederation of Greek Commerce (ESEE) appeared to support the restoration of the country’s minimum wage to €751. They released a statement saying a wage rise would “significantly boost consumption, benefit turnovers and increase employment in the troubled Greek market”.  

The union researchers were keen to show it was not the labour force responsible for the economic downturn, despite bearing its brunt. The dire state of jobs and low wages were not matched with increased investment in jobs. Indeed during the crisis, instead of investing in the manufacturing or agriculture industry, which befitted the skills set of Greek workers, there was instead a focus on the service industry: a move unlikely to bring about an export-led revolution to the country. Productivity was set to be low for a generation.

As the researchers repeated to us: the stock of skills held by the Greek labour force really isn’t the problem in the country, but matching those skills to a job is a serious issue. The 68% drop in construction jobs from 2008-2013 is another reminder of this fact.

When I raised the point that Greece could default on its loans and exit the EU altogether, repurposing the money that would have once gone towards paying back loans sought by the Pasok government, underwritten by the troika, and opposed by Syriza before they won the election, to bring about a job creation programme, the researchers resisted saying creating a new drachma is still an entirely risky short-term solution. Instead they hope to see a eurozone that adapts to non-neoliberal solutions: a social Europe in other words.

Notwithstanding the fact that the European institutions, with Angela Merkel as its proxy superior, is unlikely to shift position. Syriza seeming desperate to stay in the euro at any cost, capitulating to demands to bring about mass privatisation to the country, is not a sign that Greece has a good hand staying in. Still, the vast majority of the population of Greece agree with the union researchers that staying in is the right course of action.

“80,000 people are not being paid”

Colleagues and I then met with economist George Labridinis from the University of Athens in Attiki Square, an area once popular with supporters of the fascist Golden Dawn party. Sitting outside a café very early in the morning he told us that the Greeks don’t need German wages: “we have good weather here in Greece and we are happy to have coffee for €1, sit and enjoy our leisure time with friends and family – but even this luxury is being taken away from us”.

While Greeks may not need high wages like the Germans, they do need to be paid. Labridinis astounds us by saying around 80,000 people in Greece are not being paid their wages, including farmers and the self-employed. This on top of the 1.5m people with no job at all. “A fear of the wars is no longer with the Greek people because the war is here.”

Discussing the hardships that people are facing, Labridinis tells us that 400,000 households go without electricity permanently, while many more are losing it frequently. Despite a significant drop in house prices, from around €60,000 or €70,000 before the crisis to €14,000 or €15,000 today including repairs and maintenance, some 400,000 sit empty in Athens alone. Some other buildings in Athens are completely abandoned, many of which were former workhouses that have never been for living at all. Still, Labrdinis says, solving the housing crisis in Greece would be relatively straightforward: using the stock of unused buildings.

Talking more generally about household debts in Greece, Labridinis points to what he calls the very successful argument, pursued by the mainstream press in the country, which says debt is the responsibility of the individual. Not only are the media saying this but most political parties are doing the same. The exception to this, he notes, is the Communist Party of Greece, the KKE, who reason that because households don’t benefit from debt it is ludicrous to blame them for it.

“You have a mortgage or a consumer debt”, Labridinis says, “but who is bargaining on your behalf? Households are being told to negotiate for themselves – but there is no even playing field between them and those they owe money to”. He, like the workers union representatives, thinks that in the first instance a return to €751 per month would temper the effects of debt. “The promise to restore the €751 wage was one reason why so many people voted Syriza, but Syriza didn’t want to do it. In any case, for people whose salary is more like 400, 300, 200, why would they trust the law to return a higher wage – many people have lost faith in the system”.

A Greek housing crisis

We met with Christos Giovannopoulos and Tonia Katerini from the Solidarity4All (S4A) campaign at their headquarters in Akadimias Street in Athens. After not long being told how many houses and buildings are left empty in the capital city, it was alarming to hear from them that over 150,000 households are at risk of eviction, the result of the expiration of a law in 2013 protecting people who risked becoming homeless.

Syriza have pledged support for more protections on these grounds, but talking to Giovannopoulos and Katerini they described further law changes as “up in the air”. They also described a joke circulated during the last election, made by some more cynical left wing voters of the current government, who said they were voting for Syriza so they, rather than Pasok, could take their houses.

S4A has recently published a paper with a number of fresh demands, now protection laws have expired (currently only in Greek, soon to be published in English). It was written after Syriza came to government, hoping to influence the direction they took. A vote to change the law which critics suggest would make it easier to evict people from their homes was to be voted on in 2014, but because of the general election the vote was delayed. S4A knew the new government were about to prepare new laws on protections for people at risk of losing their house, but they also were aware that the new plans wouldn’t meet expectations of the movement.

Their proposals include stopping the auctions of people who lose their homes for at least six months while a formal process takes place where creditors and former homeowners can sit and renegotiate the terms of mortgage repayments.

The report also includes proposals to stop banks from selling on the debts of distressed households to the secondary debt market - to firms who purchase the debts of people in extremely precarious situations with whom the banks have given up asking for repayments. These firms can buy these debts for a fraction of the price of the actual debt owed, and can in principle ask for the full debt to be paid back, often with debt collection practices more reputable lenders would avoid for ethical reasons. These sorts of proposals – that affect the most vulnerable in Greece – really needn’t be spelt out, but it speaks volumes that organisations like Solidarity4All have to.

In all, they believe these proposals should be met with a programme for more social housing. They were once expecting to get a meeting with a government minister to discuss further plans developed in their report, but because of the ongoing negotiations this has been pushed back indefinitely. When I asked what proportion of housing they felt should be public, they said there was no specific proportion suggested, but that they knew how many buildings in Athens alone were empty and already owned by the general public sector – this should be immediately turned into housing for all.

A deal for households from within the eurozone

One thing notable for its absence in all my meetings, and those of my colleagues, was any sort of enthusiasm for Greece outside the eurozone. Even though we had seen the treatment of the country by the European institutions, conversations ranged from support for Greece staying in the EU to pushing the issue to one side altogether, concentrating on what could be done at a local level while the national government represented the country in Brussels.

However my own motivation for advocating a Grexit, now more than ever, is based on the following very simple summation: it is the troika that holds the Greek recovery back. The austerity terms associated with earlier loans were completely counter-productive, and the institutions know this. They even admit so now in their leaked papers. But as John Weeks said not long ago there is no Greek debt. That is to say the national debt is not the debt of the people. Rather, it is odious debt.

The creditors know they won’t get it all back, but this isn’t Syriza’s fault – in fact they protested against the last government obtaining the loans and accepting the terms at which those loans were borrowed.

By insisting Greece continues to pay back loans on terms that clearly hinder the recovery, Syriza cannot make good on their programme to restore confidence again. Their government was formed promising a programme of household debt restructuring that would have, in turn, allowed normal Greek workers and families a decent standard of living which didn’t include large chunks of their eroding wage packet spent on debt repayments. This move would create the grounds on which more Greeks become solvent, which in turn brings more consumer spending, creating jobs, bringing in more tax revenue which can be used to invest in the kind of skilled jobs the recovery relies on – and not a continuation of the low-skilled employment that reverses this recovery, as shown by the GSEE representatives.

Tsipras is on the final stretch of the talks with creditors over the bailout deal – but we’ve heard that many times over the past few months. While an unfavourable deal looks likely, contrary to the spirit of Syriza’s original programme, it is important to remember and recognise the work being carried out at a grassroots level to reduce the very worst excesses of forced EU-led austerity.

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[i] The team visiting Greece, including myself, consisted of: Joel Benjamin (Community Reinvest), Damon Gibbons (Centre for Responsible Credit), Fanny Malinen (Debt Resistance UK), Dr Johnna Montgomerie (Goldsmiths University), Ludvica Rogers (Commons Rising). 

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