FACE OF AN ECONOMY: Austerity and Poverty in Greece

A Journal of People report

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Austerity and poverty now dominate Greek life. Poverty in the country is not much different than the un-developed South. Greece, a capitalist economy, also faces serious income inequality

A report in The Washington Post said:

“Over the past seven years, austerity has left visible scars in Greece’s capital.

“A walk around Athens reveals more homeless people than ever despite some signs of a rosier economic outlook. Thousands of shops, mostly small businesses, are shuttered here and across the country. In what used to be a busy shopping arcade, closed stores are padlocked against a backdrop of hanging Greek flags.

“Whole families can be seen lining up for free meals at a growing number of soup kitchens.”

The “AP PHOTOS: Greek poverty deepens during 7 years of austerity” headlined report by Thanassis Stavrakis quoted Evangelia Konsta, organizer and sponsor of the meals offered by the Church of Greece in a run-down neighborhood in central Athens:

“Every day we feed 400 to 500 people, and this number has increased even more in the past two years.”

The Athens, May 2, 2017 datelined reports said:

“On Tuesday, International Monetary Fund and European negotiators bailout negotiators reached an agreement with Greece’s government to continue rescue funding in return for a painful new round of cuts and higher taxes over the next three years.”

The report said:

“High unemployment and a steady decline of living standards for most Greeks for seven consecutive years have had lasting effects.

“Greece has survived on international rescue loans since 2010, granted by the IMF and other countries using the euro currency in exchange for drastic cut in public spending and benefits. Greece is now in its third bailout.”

The report described the following:

“A few steps away from the church-run soup kitchen is a homeless shelter also run by the church. Guests in its tiny rooms include one family with their young children and a retired nurse suffering from cancer who is still waiting to get her pension application approved.

“Another shelter, the ‘Shelter of Love and Solidarity’, has a great view of the ancient Acropolis that’s barely noticed by the hundreds of homeless and poor who come twice a week to wash their clothes and take a hot bath.”

The report quotes Ilias Kosmidis, 38, who has been sleeping on the street for the past two years:

“The shelter is the best option for us because the government doesn’t really do anything for us.”

The report said:

“While waiting to wash their clothes, people at the shelter have developed friendships, and catch up on the news, including the French presidential election.

“Sofia Vitalaki and her husband Costas, both retired civil servants, have run the shelter since 1991. ‘It’s not just the food,’ she says. ‘Most people want their dignity back and here we try to support them.’

“On a corner of Monastiraki Square full of tourists and passers-by, a group of volunteers from the soup kitchen ‘O Allos Anthropos’ (The Other Man), cook chicken with rice. In less than 20 minutes, 230 hot meals were delivered to people who waited more than an hour to get them.”

The report describes:

“At the end of every month, it’s become a familiar sight outside banks: pensioners waiting in huge lines to collect their monthly checks. Few know how to use ATMs.

“While in line, they fret over how to make ends meet after years of cuts to their earnings, worrying about more austerity being planned.

“They won’t have long to wait till the next round of cuts. The government Tuesday finalized its agreement with bailout lenders to ax pensions further, starting Jan. 1, 2019.”

 

1.5 million Greeks live in extreme poverty

A recent study by the independent, non-government research organization diaNEOsis said:

Almost 1.5 million Greeks live in extreme poverty, most of them unemployed and young.

Specifically, 1,488,714 Greeks, most of them young and unemployed live in extreme poverty, meaning that they are deprived of basic food items, telephone service, clothes and vacations.

Extreme poverty has hit 68.5% of households with an unemployed head of the house and 45.5% of student households. Overall, in 2016, 13.6% of Greek people lived in extreme poverty.

Extreme poverty has been defined as the inability of citizens to acquire a basket of necessary goods, the cost of which changes according to the number of household members, whether they are paying rent or mortgage and, of course, whether the family lives in urban or rural area.

The finding was available in May 2017.

 

More than one in three Greeks risks poverty

In April 2017, the European Commission (EC) said:

More than one in three Greeks is at risk of poverty and isolation while the country shows the highest unemployment rate in the EU. The figures are based on an EC report on labor rights in the euro zone for 2015. The figures show that 35.7% of the population is at risk of poverty and social exclusion.

Greece also comes first in the percentage of people experiencing serious deprivation, as more than one in five (22.2%) are deprived of goods and services.

The only two EU countries that are worse off than Greece in these two areas are Bulgaria and Romania.

The EC figures also reveal the weaknesses of the Greek welfare state as Greece comes last in social benefits on combating poverty.

Social spending in Greece – excluding pensions — is estimated at just 4.1% of GDP while the euro zone average in 2015 was more than double (8.5%).

Greece also faces the most serious problems of income inequality in the monetary union. The richest 20% of the population had incomes six and a half times more than the poorer 20%.

A larger gap in income distribution within the euro area was recorded only in Lithuania (7.5 times) and in Spain (6.9 times).

Greece has for years been the country with the highest unemployment and youth unemployment rates across the European Union.

 

Children pay the price of economic crisis

Citing UN figures a Reuters report said in March 2017:

Greece’s children pay the price of the prolonged economic crisis, as a shelter for abused children is now taking in those whose parents are unable to provide food for them.

As one-fourth of the country’s workforce is without a job and one in four children live in poverty, and parents are forced to seek help from charity organizations and institutions.

In Athens, the Model National Nursery, which was established to shelter orphans of war a century ago, has now turned into a home for children whose parents cannot afford to provide even the basics, such as a daily meal. Poor parents, leave their children there for the whole week.

Iro Zervaki, the director of the children’s home, told Reuters that at least 40 children are on the waiting list, four times as many as two years ago.

The Model National Nursery houses 25 children aged two to five in a bare room with rows of beds and lacks the staff and funds to increase capacity, Zervaki said. Most places are for abused children.

“We had incidents where children even attempted to leave, to run away, to go to their mother,” Zervaki said. Their parents take them for the weekend, but there are cases when they cannot even afford to do that.

“We have children whose parents are homeless so it’s very difficult for them to even collect them for the weekend,” said social worker Anthoula Zarmakoupi. In other cases, the children wait eagerly for Friday, when they get to see their mothers.

According to Zervaki, state funding for the home has been cut and covers just half of the staff’s wages, forcing them to depend on donations for food and clothes. But the director is not too optimistic.

“It doesn’t look like tomorrow will be any better,” Zervaki said. “It will take some years. I hope not too many.”

 

Poverty goes up 40% since 2008

In March 2017, a Cologne Institute of Economic Research study on European economy said:

Poverty in Greece has increased by 40% during 2008-2015.

The study is not based on factors that include low income, deprivation of material goods, low quality education, underemployment and limited access to healthcare. The factors are used in a new “multidimensional poverty index” according to which the Institute has conducted the survey for the years 2008-2015.

The study finds:

“Greece is the big loser” of the international economic crisis as the poverty rate increase is the largest among EU countries, namely by 40%.

Ireland and Cyprus follow with a poverty rate of 28%. In Spain the poverty rate is 18% and in Ireland it stands at 11%, all countries that had to be bailed out.

 

Shocking poverty as austerity cripples Greece

A research finds:

The economic situation in Greece is worsening despite massive bailout funds from the European Union with 22.2 percent of the population now “severely materially deprived”.

In February 2017, figures released by Eurostat found:

While Greece is not the worst European country for poverty levels – Romania and Bulgaria are worse – the Mediterranean nation is not far behind as third worse. Poverty level in Greece is worsening rather than improving and has nearly doubled in the same period.

A survey by business confederation GSEVEE and Marc pollsters found:

Over 75 per cent of households suffered a significant income reduction last year.

A third had at least one unemployed member and 40 per cent said they had to cut back on food spending.

Unemployment has slipped from a peak of 28 per cent of the workforce to 23 per cent, but the rate remains the highest in the EU.

The figures indicate that the three bailouts from the EU since 2010 have failed to have an impact.

Money from the International Monetary Fund (IMF) and the EU, which were used to prop up the country from bankruptcy, came with a string of ‘austerity’ conditions which appear to have exasperated the desperate situation.

Much of the vast sums in aid money have simply been in the form of new debt used to repay old borrowings.

Around 1.2 million of those in poverty are pensioners with some having to rely on soup kitchens and food banks to survive.

Dimitra, 73, who lives in Athens, has to resort to handouts to survive. Now more than half of her 332 euro monthly income goes to renting a tiny apartment. The rest is used for bills. She told Reuters: “It had never even crossed my mind.” She declined to give her last name because of the stigma still attached to accepting handouts in Greece. Dimitra said: “I lived frugally. I’ve never even been on holiday. Nothing, nothing, nothing.”

The food bank in central Athens where Dimitra collects her groceries has 11,000 families – 26,000 people –registered. In 2012 the figure was 2,500 and 6,000 in 2014. Of those currently registered about 5,000 are children.

 

Almost Two in Five Greek Children Face Poverty

In November 2016, Eurostat released data ahead of Universal Children’s Day (November 20) showed:

One in four children is at risk of poverty or social exclusion in the EU. In 2015, around 25 million children, or 26.9 percent of the EU population from the ages of zero to 17 years were at risk of poverty or social exclusion as a result of living in households at risk of poverty. The share o poverty and social exclusion is highest in Romania (46.8 percent), Bulgaria (43.7 percent) and Greece (37.8 percent).

The highest increase regarding children suddenly risking poverty or social exclusion was noted in Greece where the rate was 28.7 percent in 2010 and shot up to 37.8 percent in 2015 (+9.1 percent), Cyprus (+7.1 percent) and Italy (4 percent). In Latvia, however, the rate had decreased from 42.2 percent in 2010 to 31.1 percent in 2015 (-10.9 percent), followed by Bulgaria (-6.1 percent) and Poland (-4.2 percent).

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Extreme Poverty in Greece

What is the extent of extreme poverty in Greece? A new diaNEOsis study calculates the effective extreme poverty threshold for Greece.

Thodoris Georgakopoulos writes in June 2016:

“The problem of poverty is not something unique to Greece. The country is facing one of the greatest economic crises in the history of mankind, but poverty and inequality are universal problems. Even some of the wealthiest countries in the world face them. However, Greeks lost one third of their purchasing power and a quarter of their income during the first half of this decade. This must surely have made poverty a much graver problem here. But how much graver?

“In recent years, the vast majority of Greeks have seen their income shrink, due to the reduction of their salary or pension, or due to unemployment. In 2014, 95% of Greeks stated that ‘they find it difficult to cope, financially.’ But how many of them are truly poor? How many are destitute, struggling to survive? And what can be done to help them?”

The study is comprised of a policy paper, authored by professor Manos Matsaganis, Dr. Chrysa Leventi, Eleni Kanavitsa and Maria Flevotomou, and an independent public opinion survey, conducted by the University of Macedonia on behalf of diaNEOsis.

The summary of the main findings are:

It has been well documented that the easiest, most effective way to help them is to create a fair system that provides them with the main resource they lack: Money.

Spending on social welfare in Greece did not provide adequate levels of protection for the weak. There were significant gaps which, after the onset of the economic crisis, have widened.

The truth is that the fight against actual, extreme poverty probably was never a main priority for the Greek state.

Thodoris Georgakopoulos mentions:

“To measure poverty, official statistics in Europe use a metric called ‘relative poverty’. People living in relative poverty have income that is lower than a set percentage of the economy’s median income. In Europe, the relative poverty threshold is currently set at 60% of median income. This means that the rate of relative poverty is equal to the percentage of people who have income less than 60% of median income. (“Median income”, by the way, is the income of the median individual, i.e., of the citizen exactly in the middle of the income distribution. People who are richer than the median individual are exactly equal in number with those who are poorer).

“This is of course an arbitrary limit. It is used mainly to show how many people are significantly below an ‘average’ standard of living, but it tells us nothing about whether these people actually face problems of survival. It does not tell us whether they are genuinely ‘poor’. It only shows us that these people find themselves noticeably below the average household’s living conditions. This is why the rate of relative poverty is not greatly affected by a country’s economic status. During the euphoric growth of the 1995-2008 period, for example, relative poverty in Greece remained almost stable at around 20%. After the outbreak of the crisis in 2010 and the unprecedented recession that followed, it barely increased.”

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The extreme poverty threshold in Greece ranges from €182 per month for a single member household in suburban or rural areas living in a privately owned home, up to €905 per month for a couple with two children living in Athens and paying rent or a mortgage.

The percentage of extreme poverty in Greece for 2015 stands at around 15%. In 2011, the percentage was 8.9%. In 2009, it did not exceed 2.2%.

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The percentage of extreme poverty among children (17.6%) and young people aged 18-29 (24.4%) is impressively high while only 2.7% of the population aged over 65 have monthly income below the threshold.

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Families without children face lower extreme poverty percentages than families with children, but families with three children seem to be in a better position than those with one or with two. Families who rent show a higher extreme poverty percentage than the vast majority who live in their own home without a mortgage (30.5% versus 10.8% in 2015).

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The group that is most at risk of all is, of course, the unemployed. The percentage of extreme poverty in the unemployed in recent years stands at around 70-75% – compared to less than 50% in 2011. In contrast, less than 1% of the families of public sector employees live under the extreme poverty threshold. The respective percentage for pensioners is also very low (3.8%).

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During the crisis, as the number of the unemployed doubled, the number of unemployed benefit beneficiaries fell by half. In 2015, fewer than one in ten unemployed people were receiving unemployment benefits.

Today, only 9.5% of the unemployed receive the standard unemployment subsidy while very few long-term unemployed are entitled to receive long-term unemployment benefits. The standard subsidy is only offered for a period that does not exceed 12 months.

The child support subsidy has been given to low-income families since 2013.

 

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