Relatively speaking, Greece has implemented the highest direct injection of cash for the support of its economy during the pandemic compared to its fellow eurozone member-states, but without achieving similarly high records in replenishing the incomes lost, according to research by the Hellenic Fiscal Council.
The data from the International Monetary Fund which the study is based on show that Greece’s direct spending to support its economy – households and enterprises in sectors other than healthcare – amounted to 10.7% of the country’s gross domestic product, leaving Germany in second with 9.8%.
That great performance in state spending may be the flip side of the other Greek record, that of the increase in bank deposits, reaching the second highest rate among the member-states of the Organization for Economic Cooperation and Development (OECD), behind the US. In other words, the state support – or at least a part of it – went straight into the bank.
Despite the government’s generosity, the Eurostat figures that the council’s researchers also processed revealed that the country did not secure a high degree of offsetting lost incomes.
As Giorgos Ioannidis, one of the report’s authors, tells Kathimerini, that rate amounted to 41.2% of the incomes lost, ranking Greece 16th among the 27 European Union members in that respect. The Netherlands was top with a 97% rate and Sweden was last with 18%. Greece ranked 11th among the 19 eurozone members.
The horizontal character of the support measures which involved little targeting – at least initially – could serve to partially explain this result. On the other hand, the report stresses that the support measures helped not only in averting an increase in unemployment, but also in reducing it from 17.3% to 16.3%, with similar phenomena also observed in Italy and France.
The employment protection clause that accompanied many support measures is a factor that explains that development, while researchers also cite an artificial reduction of the workforce based on the definitions of Eurostat and the Hellenic Statistical Authority (ELSTAT).
The report argues that the decisive factor in the level of each country’s spending is its quality of governance, where Greece fares badly, per the World Bank.