Sovereign debt crisis
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summer 2010, GSEE concluded a collective bargaining agreement with a three-year horizon which foresees a freeze of the national minimum wage for 2010 and an average annual increase below 1 per cent per year over 2010–12. Although inflation was 4.7 per cent in 2010 and is expected to be 3 per cent in 2011, the troika is asking the Greek government to persuade the social partners to renegotiate downward minimum wage increases for 2011–12 or to impose a reduction of the national minimum wage by law.
5.
Killing the ‘patient’: the dramatic consequences and impasse of austerity policy
To date, the neoliberal offensive has had a major disruptive effect on social cohesion, as well as on people’s lives and morale, especially the most vulnerable, while it is leading the economy to collapse and the state to default under much worse conditions than before the ‘financial rescue’ by the lenders. Eighteen months of supervised economic adjustment has led to huge wage and pension cuts, excessive taxation of low and medium incomes and a retrenchment of the welfare state. Unemployment has climbed from 9.5 per cent in 2009 to 16.3 per cent in the second quarter of 2011 and is still on the rise. Youth unemployment has reached 43 per cent, while are families experiencing major income losses and are increasingly unable to provide for their offspring. At the same time, social protection is being weakened and the quality of social goods and services eroded. Increasing numbers of people are being pushed into absolute poverty and social exclusion. From an economic and financial perspective, ‘shock therapy’ is killing the patient, having produced a debt trap and a spiral of austerityrecession-austerity. Total fiscal effort in 2010 amounted to 9.7 per cent of GDP.3 An equally significant effort is required by Greece’s lenders for 2011.4 Deepened and permanently fuelled by fiscal consolidation measures, the recession is destroying thousands of jobs, own-account
3. This is derived by adding the 4.5 per cent decrease in GDP to the 5.2 percentage-point reduction in the public deficit. 4. The deficit reduction target for 2011 is 2.8 percentage points of GDP, but GDP is projected to decline by 6.5 per cent.
A triumph of failed ideas – European models of capitalism in the crisis
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