ECONOMY

State to bridge gap left by private sector

state-to-bridge-gap-left-by-private-sector

From mid-March up until the end of May at the earliest, the state looks set to be the main – if not the only – income provider for about 3 million households in Greece, or 70 percent of all families.

The reduction of the private sector’s contribution toward the country’s total income is unprecedented and the gap will have to be bridged (although not covered) by the state budget.

Besides the 2.5 million pensioners and at least 650,000 workers in the broader public sector, many hundreds of thousands of private sector workers must also be maintained via state cash: They constitute about 1.5 million private sector employees whose contracts have been suspended (over 650,000 private employees have already applied for the 800-euro handout), up to 750,000 self-employed professionals who in the coming days will apply either for the 800-euro benefit or a 600-euro voucher for scientific training, and another 233,000 jobless people.

After the first round of applications for the 800-euro handout that ended last Friday with 650,000 applicants, the second round is already under way. While the part of the procedure required of employers will have been completed by April 20, workers will continue to submit their applications for the benefit up to the end of the month.

According to estimates by the ministries of Finance and Labor, up to 1.5 million workers may find themselves having been furloughed. As of this month, the list of enterprises considered harmed by the pandemic has expanded considerably. Up until last Friday over 560,000 enterprises had utilized suspended employees’ contracts, and that number is likely to increase further in the coming days.

A worker who entered furlough status on March 15 received a portion of his salary in early April. At best, his suspension status will remain in force up to end-April, so the earliest time his employer could pay him a salary would be end-May.

Just a few hundred thousand employees in the private sector will receive their salaries as usual at the end of April and May, mostly at banks, supermarkets etc, while tens of thousands will find themselves making only half their salary due to their employers’ decision to put them on rotational employment, working for just two weeks a month.

Given all of the above, April and May 2020 will go down in history for one more reason: the jump in the state’s participation in the total income of citizens.