ECONOMY

Greece’s ‘Winter of Discontent’

As the Greek economy slides even further into recession, with more shops and businesses closing down and the number of unemployed rising, some analysts have started wondering whether the country will live its own «Winter of Discontent.» Although it remains to be seen, it is unlikely to resemble the British one of 1978-1979. The expression Winter of Discontent became known worldwide due to the widespread strikes in the winter of 1978-1979 in the United Kingdom as the trade unions demanded greater pay rises while the Labour government of James Callaghan sought to hold them below 5.0 percent to fight inflation. The strikes ended in February 1979 but these events are generally agreed to have helped the Conservative Party led by Margaret Thatcher to win the 1979 general elections. To be exact, the phrase Winter of Discontent was coined by the editor of the Sun in an editorial at the time but the actual phrase comes from the opening line of William Shakespeare’s play «Richard III»: «Now is the Winter of our Discontent/ Made glorious summer by this son of York…» Of course, Greece today has little in common with the Great Britain of 1978-1979. Greek trade unions are not as powerful as the British unions at the time nor are they as strong as they once were a few years or even a decade ago. This is because their rank and file appear to understand the severity of the country’s economic situation and have shown little desire for demonstrations and other industrial action, while their leaders have usually seemed receptive to the demands of their political parties. This is especially true since the stronger unions can be found in the public sector and at least some of their members appear to be gradually appreciating the privilege of lifetime employment at a time that the number of people without employment continues to rise in the private sector. Consequently, the most dynamic opposition to the government’s economic austerity program may come from unions associated with the leftist opposition and some in state-owned utilities with monopolistic power, such as the Public Power Corporation. Therefore, the Socialist government is not likely to face any significant challenge to its economic policies due to general strikes, unlike its British counterpart in the 1978-1979 period. This however does not mean it will not face the rising discontent of the populace, which may be expressed in the polls for local authorities in early November. This popular discontent is likely to be fueled by a likely surge in theft and other crimes, according to some analysts. Within this kind of environment, the government’s argument that the economy is likely to shrink by less than 4.0 percent, as projected in the International Monetary Fund – European Union approved plan, and the foreseen budget deficit target of 8.1 percent of gross domestic product (GDP) will not have the same positive impact on the average Greek’s frame of mind as was hoped. Many market participants think that the positive impact on consumers from the real GDP decreasing by 3.0 percent instead of the projected 4.0 percent will be very small if unemployment continues to climb to 14 percent or more in the next few months. Already there are signs that some small companies are taking advantage of new labor laws which make it less costly to fire employees, contributing to the rising trend in unemployment. Even the optimists are now estimating that the Greek economy will not be able to start getting out of its slump before next summer at best. The pessimists, however, believe this will not be possible before 2012. The latter’s main source of concern is the depressed consumer and business sentiment which has come on the heels of a restrictive fiscal and incomes policy and the absence of growth policies and initiatives. Therefore, the rise in unemployment rather than widespread strikes by trade unions may present the biggest challenge to the Greek government and society in the coming months and may help to undermine social support for the present austerity program. The fact that even market participants, and not just leftist partisans, openly question the merits of the current IMF-EU plan for the Greek economy, even in the medium-term, makes one wonder how long it will take before this notion takes hold in other segments of society. So, Greece’s Winter of Discontent of 2010-2011 is unlikely to resemble the British one of 1978-1979. It may not lead to the same type of political change seen in the United Kingdom at the time. However, it may sow the seeds of societal and political change in the distant future. Only time will tell.