Study finds Greek crisis policies created huge inequalities

From 2008, before Greece signed a bailout deal with its creditors setting out a raft of cost-cutting measures, until 2012, the tax burden on lower-income Greek households skyrocketed by 337.7 percent compared to just 9 percent for high-income groups, a recent study by Athens-based professors Tassos Giannitsis and Stavros Zografakis found.

The study, for the German-based Macroeconomic Policy Institute, titled “Greece: Solidarity and Adjustment in Times of Crisis,” examines the impacts of the crisis.

Other than major inequalities between rich and poor, the study also noted a major gap between the public and private sectors. In 2009-13 average pay cuts in the public sector came to just 8 percent. In the private sector they were sliced by as much as 19 percent. This further widened the gap between average salaries in the two sectors from 35 percent to 43 percent.

“This policy had much more destructive effects on the productive base of the economy than a spending-led adjustment process, leaving intact an inefficient, corrupt and backward public administration,” the authors note.

The study found that taxation made a 72.4 percent contribution to consecutive governments’ fiscal adjustments, compared to the 7.5 percent contribution of spending cuts.

It concludes by saying that the “emergence and persistence of such divides implies that certain categories of people have come out as winners from the crisis.”

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