Τhe 40% of deprivation

Poverty is no longer due to unemployment, as was the case in the past. It has become a structural element of the functioning of the Greek economy, an economy that massively produces the new poor – people with jobs who earn meager wages.

So how many Greeks are struggling to get by despite one or possibly even two wages coming into the family each month, and run out of money long before the month is over? Two independent surveys, a public opinion poll and an economic study, estimate that this is the case for about 40% of Greek households.

Both surveys were presented at the event organized by the Alexis Tsipras Institute on October 22. The poll, conducted by Metron Analysis, showed that 44% of households are barely making ends meet, while 40% run out of money before the end of the month. This is true for 66% of working-class households. The paper presented by researcher-economist Yiorgos Ioannidis from the Center for Planning and Economic Research (KEPE) concluded that wages evaporate in 40.9% of households before the end of the month (from 35.9% in 2020).

The cheap labor force triumphs as the constituent element for the Greek economy’s model of growth.

Labor has been getting cheaper in recent years, not because of inflation in general, but because wages have been fixed so that they cannot keep up with rising prices

One of the main reasons why the balance of payments cannot be fixed is that we produce and export mainly labor-intensive goods, because labor is comparatively cheap. And if investment in modern equipment and high technology are not the trump card of the Greek economy – like investment in tourist activities, real estate and the primary sector – the causes are also to be found in Greece’s comparative advantage, from the point of view of the investors: the cheap labor force.

Labor has been getting cheaper in recent years, not because of inflation in general, but because wages have been fixed so that they cannot keep up with rising prices. Since the years of deflation, only the value of labor (wages) has failed to recoup its losses, unlike the value of businesses (profits) and real estate (prices and rents), which not only have recovered but have exceeded their pre-crisis levels. Labor becomes cheap because of the government’s redistribution measures. Former finance minister Nikos Christodoulakis has estimated that in the last five years, around 20 billion euros has been transferred from wages to profits. It is a monstrous redistribution.

This type of economic development is taking us back – not toward convergence but toward divergence from other EU member-states. This trend has not been reversed by our economic growth rates, which are currently somewhat higher than those of other developed European countries. That is because – to the extent that this difference is not due to the fact that other countries have robust heavy industry that is affected by the energy crisis while we do not have such “burdens” – our growth rates are due, almost exclusively, to the money of the EU Recovery Fund. As the late Synaspismos lawmaker Michalis Papagiannakis said, an economic growth that deserves the meaning of the word is linked in today’s conditions to expensive labor. Cheap labor prevents it.

As is (also) happening today in Greece.