Back to 2004? More like 1929
He meant it as a warning, but when Finance Minister Evangelos Venizelos said a few days ago that Greeks? incomes would be returning to 2004 levels, it could have been interpreted as the most optimistic thing the government has said for months.
In many ways, 2004 was the most hopeful year Greece experienced for decades. It had a growth rate that was the envy of many eurozone countries, it pulled off the miracle of successfully hosting the Olympic Games and the national soccer team became the biggest outsider to ever win the European Championships. It was a time when everything seemed possible.
In fact, within hours of Venizelos mentioning 2004, Angelos Charisteas, the striker who scored Greece?s winning goal in the final seven years ago, struck again to send the national squad to next year?s European Championships. It was Charisteas?s first appearance and goal for Greece in many months. It was as if Venizelos?s words had carried on the wind to within earshot of the mischievous gods of fate.
However, if you step back and survey the past decade, 2004 was actually a bittersweet year for Greece. Behind the feel-good factor, bad seeds were being sown. Strong growth was driven by unsustainable and pointless consumerism, the incoming New Democracy government revealed discrepancies in the recording of the public deficit, breaking the bonds of trust with the eurozone, and Greek politics entered its most vacuous period, devoid of ideas and full of hot air.
For all the pleasure and pain associated with 2004, though, Greece?s journey back in time will not end there. In fact, Venizelos was engaging in a bit of positive spin when he suggested that incomes would drop to where they were seven years ago. Figures released this June by Eurostat, the European Commission?s statistics agency, indicated that even last year — before deeper wage cuts in the public and private sectors — the average income had dropped to the same level as 2002. This year?s adjustments will no doubt knock Greeks back into the 1990s, and if the recession continues, it won?t be long before we?re all listening to Wham! and wearing legwarmers.
The finance minister attempted to entice us into his hot tub time machine with the suggestion that it will only get as bad as 2004, but the problem is that once you get in, you can?t be sure where the time traveling is going to end.
For instance, if you look at the main index on the Athens Stock Exchange — which was further battered by plummeting bank shares this week — you will see that it has already dropped to where it was in 1993. This is convenient because the yield on 10-year Greek bonds (close to 25 percent) has also risen to the same level as 1993, when the Maastricht Treaty — which paved the way for the euro — was signed. The signing triggered an increased demand for Greek notes and the yield began to decline rapidly. In 2004, it was under 5 percent.
The early 1990s is also when private sector workers in Greece began to enjoy the benefits of collective labor contracts, which guaranteed a minimum wage and rights with regard to their working conditions and compensation, among other things. But amid the jumble of legislation Venizelos submitted to Parliament this week lies Article 37, which aims to put on ice the collective contracts that apply to specific sectors of the economy. Some MPs fear this opens the back door to national contracts and the minimum wage being scrapped. The finance minister says the article has been agreed with the troika and can?t be changed as it would lead to Greece not receiving its sixth loan installment. The European Commission?s representative on the troika, Matthias Mors, told Kathimerini that Greece?s lenders did not demand the scrapping of collective contracts but asked the government and unions to find ways to increase competitiveness, particularly among low-skilled workers. Either way, salaries and rights are likely to be pared down.
Advocates of the move will argue that it?s a step back in order to take a step forward. It?s difficult to share this optimism when there are so many other indications that Greece is hurtling backward in time and nobody?s attempting to pull the lever in the other direction. Unemployment is currently at 16 percent and is forecast to edge close to, if not over, 20 percent by next year. Labor experts say that the long-term unemployed, who are not included in the government statistics and who represent about 5 percent, should be added to this figure. The last time Greece had an unemployment rate of about 25 percent was in the 1960s, which is when it experienced its last major wave of emigration.
Then, there?s the issue of economic growth, or lack thereof. Greece has been experiencing continuous negative growth since the end of 2008, possibly even earlier, according to revised statistics. Growth continued to slump in the first half of this year. It will be the same story for the second half. This means Greece has experienced at least 11 quarters of consecutive negative growth. To put this in perspective, the Great Depression produced 12 quarters of negative growth. For anyone who doesn?t remember, that was between 1929 and 1932.
That?s why the possibility of reliving 2004 seems as much of a dream as when Greece was actually living through it. Venizelos may have tried to summon its spirits, but 2004 is not coming back. Everything no longer seems possible.
[Kathimerini English Edition]
