Asphyxiated households and their safety net

By Nikos Konstandaras

Anyone interested in the causes of our political system’s fragmentation, as depicted in polls depict, will find much in the Small Business Institute’s annual report, made public yesterday. It proves that a large number of households are “on the brink of economic asphyxiation” and shows the high level of insecurity that has strengthened “anti-systemic” forces. The fear that many households have for their survival is translated into a lack of faith in the political system and support for an eclectic array of forces that insist on the state’s primacy in everything.

The report (by IME-GSEBEE, in collaboration with the MARC polling firm) depicts a population that is exhausting its reserves and that relies on the support of family and friends – who, in turn, face ever-greater responsibilities at a time that their incomes are greatly reduced. Among the more important findings is that whereas some 1.4 million households (40.2 percent of the total) have at least one unemployed member, only 200,000 people get unemployment benefits. This means that more than a million people get no state support. And this at a time when, from 2010 to 2013, close to 95 percent of households have suffered drastic revenue cuts – on an average of 39.47 percent. One in three households is close to being unable to pay what it owes to banks, the State, public utilities, etc, while 41.7 percent believe that they will not be able to meet their obligations this year.

The Greek’s “castle,” his own home, is also under siege. A large number of households – 86.7 percent – own property, of whom 28.1 percent have mortgages. One in three fear that they may lose their home because of accumulated obligations. “This uncertainty creates a vicious circle of disinvestment and undermines property values,” the report notes. Values drop even as properties are burdened by ever higher taxes.

In this climate of uncertainty, pensions are a basic support, with 48.6 percent of households relying on them. Also, citizens still have faith in the national health system, with 55.8 percent saying they would prefer to go to a public hospital for a serious health problem.

Earlier this month, the Finance Ministry announced that from 2010 till today, Greece has taken measures equal to 31 percent of GDP, or 62.92 billion euros. Spending cuts (33.31 billion) and increased revenues (29.61 billion) have had a direct effect on each household. The IME-GSEBEE report shows just how great an effect. But it also shows the safety net that has softened some effects of the crisis: Greeks are still helping each other, even as they rely more and more on pensions and state health and welfare services. The future will depend on the political system’s ability to persuade citizens that it is capable not only of preserving this safety net but of strengthening it. Failure to do so will lead to the economy, society and politics suffering heavy new blows.