By Maria Negreponti-Delivanis*
May 10, 2023
Lately, there has been a concerted effort to embellish the developments of our economy, which, however, in no way corresponds to reality.
One of these latest impressive but empty announcements refers to the alleged reduction of public debt as a percentage of GDP of 16% in 2022, compared to 2021.
I reasonably wondered how it was possible to justify this improvement, and even more so in the period 2021-2022, in which our economy also had to resort to new borrowing.
My initial suspicion that the triumphant conclusion about the alleged reduction of the Central Government’s debt was, most likely, the result of an unorthodox mixing of fixed and current figures, was confirmed by the relevant ELSTAT data. In particular, the finding of the alleged reduction in public debt was derived by dividing inflationary GDP (whose increases are not reflected in the real economy) by public debt, which is a constant, i.e. not affected by inflation. So, contrary to the optimistic but unfounded announcements by officials about the supposed reduction of our debt, it is unfortunately, and as was to be expected, increasing significantly. Indeed, according to the official data of the General Accounting Office, using GDP as constant, i.e. free of inflationary load, it turns out that our debt not only did not decrease, but on the contrary, it increased in 2022, compared to 2021, by 11.4 billion euros (at the end of December 2022, the debt soared to 400 billion euros, from 388 billion euros in December 2021).
However, the baseless optimism of the officials is not exhausted in trying to sugarcoat the debt developments. Another additional and official announcement refers to the alleged increase in the minimum wage, which supposedly results in an improvement in the living standards of workers.
We are, of course, talking about the real wage, not the nominal wage. In other words, the quantity of goods and services that can be acquired with the monetary units that make up the nominal wage.
In periods of inflation, the creation of the well-known vicious cycle of wages and prices is inevitable, since increases in nominal wages necessarily lag behind increases in the general price level, so that the real wage is constantly decreasing. It goes without saying, moreover, that the household baskets, which, as is well known, have failed everywhere, are unable to change the above-mentioned inevitable developments in Greece.
In particular, in Greece, the minimum wage is the lowest in comparison with any other EU economy, while the OECD’s announcement a few days ago of a further reduction of 7.5% is added to this negative record. I should also mention that, according to Eurostat, although Greece is seeing a downward trend in inflation, estimated to be running at 5.4% in April, food inflation is running at 14.1%. Needless to say, in low-income households, the rate allocated to basic food products is significantly higher than in higher-income households, so that households in this category are more impoverished. Real wages in Greece are further nibbled away by the increase in rents, estimated at over 5% on average, and by the increase in interest rates, which absorb an ever larger share of the incomes of low-income earners, many of whom are also borrowers. The consequences of the deprivation of wage earners by the above factors are reflected in the need to change their consumption habits, resulting in a reduction in consumption and a general shift towards cheaper and lower quality goods. Consequently, the assurances about wage increases and the improvement in the standard of living of wage earners do not correspond to reality, since it is quite the opposite: a significant deterioration in their standard of living, due to the reduction in their real wages, which could not be counteracted by the recent increase in their nominal minimum wage. This is, unfortunately, the undeniable conclusion, as can be seen from the comparison between the 9.4% increase in the minimum wage, from 1 April 2023, and the sum of the individual funds that are siphoning it off.
Alongside the above announcements about supposedly reducing the debt and supposedly increasing wages, enthusiastic statements about how well our economy is doing, how
how well it is developing and how much its so-called achievements are admired and admired. These statements, apart from being in the realm of fantasy, also end up absolving the Memoranda of their criminal responsibility, trying to present a collapsing economy as a supposedly fast-growing one. And let me add that the appeals to admire the “achievements” of our economy are solely about the concern/gratification of our creditors as to whether our country will be able to pay its exorbitant debts in a normal way. Because, if our creditors were really interested in the rescue of our economy and the welfare of our people, they would have taken care to include in the lengthy, insulting and inhumane memoranda the self-evident need to link the ability to service the debt with growth.
It takes unlimited courage, indeed, or complete ignorance of the definition and content of economic development, for those who occasionally claim that our economy is on a growth trajectory. Especially when, in order to support such a belief, inflationary GDP increases are adopted. But, how and where can such baseless statements stand? On the sale of public property, which has been running unabated for the last 13 years and which continues unabated? On the fact that, from first in terms of per capita income among the Balkan countries before the memoranda, our country now appears second to last, with only Bulgaria last? In the embrace of electric cars and wind turbines as suitable investments for Greece? In the destruction of our primary production, through the CAP, and the de-industrialisation of our secondary sector, which was nevertheless growing rapidly before the memoranda? The ever-widening gap between imports and exports? In the deification of tourism, which is of course a remarkable sector of production, but not when it is almost the only one that keeps the Greek economy from a deadly decline? Particularly when, as now, serious international anomalies are threatened which will inevitably reduce it to zero? In the enthusiasm for so-called investments, so called because of the selling off of everything, or for investments resulting from the massive and uncontrolled sale of Greek homes and Greek territory? But what kind of investments are these, which are carried out without a long-term development programme, as and when they happen, and therefore preclude any continuation because of the lack of multiplier effects? Where is this long-awaited growth, so often announced as such, every time a growth rate above 1% is momentarily observed, only to fall back to the fixed, for the Greek economy, long-term rate of 1% (i.e. the one predicted by the IMF)?
And finally, has the enthusiasts of our so-called economic achievements calculated how many light years it will take Greece to reach the per capita income that existed before the memoranda?
In conclusion, assurances of growth, while it does not exist, apart from absolving the memoranda of responsibility, they also lull the Greek people to sleep, who either believe in its existence or are convinced that there is no hope of improvement in our poor country. In this way, our governments are depriving our people of the skills and militancy of our people, which should be used to reverse our economic and other impasses.
*Former rector and professor at Macedonian University
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