Friday, March 09, 2012

Social and Human Costs from the Troika program

One of the biggest and worst social costs of the current program is the enormous loss of jobs. As noted above, unemployment hit a record 20.9 percent in November.[At the present the record is 21%] By 2016 it is still projected to be at 17 percent, far above the 7.7 percent pre-crisis level, and a level that is generally seen as a national tragedy.[10]

Another way to see these losses is to look at employment. Figure 3 [see the picture on the left]  shows employment as a percentage of the working age population. By 2011 it had fallen to below its level of 1994, almost six percentage points below its 2008 peak.

The government has committed to cut 150,000 jobs from public employment for 2010-2015, about 22 percent of public employment. The IMF notes that:

…these reforms would bring general government employment to 12 percent of the labor force, 3 percent below the OECD average (2008), and given the planned wage reforms, would reduce the public wage bill to about 9 percent of GDP, matching some of the lowest spending OECD countries (e.g. Czech Republic and Slovakia).[11]

The current negotiations appear to have reached agreement on a cut of 22 percent in the minimum wage, with 32 percent for workers under the age of 25.[There is already agreement] The minimum wage in Greece is about €880 euros a month[was 750 and now is €586]. This will hit these wage earners quite hard, and have a significant impact on income inequality and poverty. It will also affect many other wage earners, since changes in the minimum wage are often used as a reference for other wages up the income ladder.[12]

Greece’s agreement with the IMF/troika also contains measures designed to weaken collective bargaining, which the IMF Fifth Review refers to as a “flagship reform.”[14] The measures are to weaken sector-level bargaining by unions, in order to “allow wages to fall below existing sectoral floors,” according to the IMF.[15]

The recession and budgetary measures also appear to be having a significant impact on health and other social indicators. From the U.K. medical journal, The Lancet:

Suicides rose by 17% in 2009 from 2007 and unofficial 2010 data quoted in parliament mention a 25% rise compared with 2009. The Minister of Health reported a 40% rise in the first half of 2011 compared with the same period in 2010 […] Violence has also risen, and homicide and theft rates nearly doubled between 2007 and 2009.[16]

The authors also find evidence that there has been reduced access to health care as well as a 52 percent increase in HIV infections from 2010 to 2011. Since most of the data is from the first year or two of the crisis, it is likely that some of these statistics have worsened with the accelerated downturn of the last two years.

SOURCE: Mark Weisbrot and Juan Antonio Montecino, More Pain, No Gain for Greece, Center for Economic and Policy Research, February 2012, pages 7-9

10 The IMF projections are based on the EU harmonized unemployment rate, which tends to be lower than the national
11 IMF (2011a), p. 16.
12 See Du Caju et al. (2009).
14 IMF (2011a), p. 9.
15 IMF (2011a), p. 25.
16 Kentikelenis et al. (2011).

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