In the second analysis on the end of the Greek crisis which threatened to shatter the euro, Dirigentes explains the roadmap designed by the government of Prime Minister Alexis Tsipras and agreed with the European institutions, the creditors who still support Greece in 2018. On the horizon, legislative elections in the fall of next year.
The direction of Athens is to maintain growth of 2% or more until 2022, a rate which, together with Community money, will provide sufficient fiscal space to reduce the fiscal pressure on the population and specific sectors, in more to increase social spending. Until that year, the country’s primary surplus should be 3.5%, according to the pact with European partners. Without a precise figure for the following years, Brussels hopes that Greece will not go back and make the mistakes of the past, such as excessive debt.
Minimum wage and collective bargaining, the social agenda
The Tsipras government will boast from August to the Greeks of the end of the European rescue plan and of the major macro figures which confirm growth of more than 2% for this year. At the same time, he is ready to step on the accelerator of social and labor policies to show the advantages of applying an austerity memorandum.
“The increase in the minimum wage is a policy that we will put in place after the exit of the program. It is not something that we have long negotiated with the institutions, since it will be in the later period [al fin del programa de asistencia financiera]. For us, this is a key policy. One of the pillars of the Greek economic agenda in Brussels is the young Minister of Employment, Effie Achtsioglou, who advances in Brussels, without specifying the improvement but acknowledging that it will be “a cautious increase”. Brussels expects legislation to comply with it by 2019.
From the Greek executive they deplore the loss of human capital during the crisis years, especially of educated young people, whom unofficial studies estimate at 180,000 emigrated university students. With youth unemployment affecting 45% of those under 25 and an average salary of 700 euros per month, Minister Achtsioglou recognizes “that salaries are extremely low and this is perhaps the most important factor for which younger and better prepared left the country”. .
As in Spain, Greece is experiencing a significant drop in unemployment and the unemployed are at less than one million, a psychological milestone. However, the improvement of the labor market is associated with part-time contracts, temporary work and depends on services such as hotels or tourism.
In Brussels, George Zavvos, adviser for European affairs of New Democracy, the main opposition party and which the polls place up to 15 points ahead of Syriza in the voting intentions, insists on a meeting with a group of media to which he was invited. that Greece’s GDP “has not yet recovered and that the government’s current narrative on how to get out of the crisis is totally incorrect”. The data would dismantle this accusation, according to the minister, since seven out of ten new contracts would be full-time.
The other leg of this social agenda to cauterize the wounds of the crisis is the restoration of collective bargaining, eliminated in the reforms required during the country’s economic bailouts. “We are going to do this to allow wages to resume in the private sector,” says Achtsioglou, who has already had permission from Europe to apply the measure for months, because it is still under the current rescue parameter. . And in parallel, it also plans to introduce a tax exemption in 2019 for companies that transform temporary jobs into sustainable jobs, a measure yet to be specified.
The financial challenges of an indebted country
A banking system held together with pins is another of the legacies of the crisis. Although relaxed, the capital controls imposed in 2015 when Greece was preparing to exit the euro still exist and citizens can only withdraw up to 2,300 euros per month. There is still no date for its total withdrawal.
The high rate of default is another major banking problem, about 40% of total credit, a hole that slows down the arrival of business credit. From the European Commission, they estimate that its cleaning will last between 5 and 10 years, a period that the Deputy Minister of Economy and Development, Alexis Charitsis, prefers not to specify. In recent months, legislation to sell these credits to investors has been finalized. “Banks have ambitious targets in 2018 and 2019 to get rid of them and what they tell us is that they are doing well,” says Charitsis.
Along with this banking consolidation and the social agenda, Greece will have to spend almost 7% of its GDP over the next decade to pay its debt, in a country which, after losing 25% of its economy due to successive recessions and despite two consecutive years of growth has not yet returned to its pre-crisis levels. New Democracy’s George Zavvos argues that if they come to power, they will maintain the reformist agenda to show their commitment to Brussels but that they will try to “negotiate a primary surplus target below 3.5% which allows a credible growth”, an option that the consulted sources of the community reject.
Europe’s enhanced surveillance
In Brussels, there are fears that after eight years of European supervision, the Greek public sector has forgotten the times and methods of applying its own economic policies. It is also unclear whether the administration will resist internal pressure from oligarchs, economic groups or political formations to reverse the reforms or whether the civil service is prepared for a “self-sustaining” future, in part because of the loss of human capital resulting from economic emigration and the nearly 300,000 civil servants cut during the crisis.
Since Greece launched the European bailouts, everything has been exceptional or applied for the first time in this country in recent years. And from August 21, the “vanguard” in the application of Community policies will not abandon the lands bathed by the Aegean Sea.
Greece will launch enhanced surveillance or enhanced surveillance, envisaged in EU rules but never used. In exchange for receiving billions of euros this summer and for the next four years, quarterly missions from the Commission, the ECB and the ESM, the men in black of the troika, will travel to Athens to verify the implementation implementation of reforms and the evolution of its public accounts. Twice as many as Spain or Portugal, countries which also experienced their particular rescues.
Greece’s period of heightened surveillance will last several years and leaves the door open for the EU to demand the application of political measures. “Someone has to watch the future, questions like respect for the primary surplus or the evolution of the debt,” explains Olivier Bailly, chief of staff to the Commissioner for the Economy, Pierre Moscovici. In any case, the enhanced surveillance will not have a timetable for reform or a new rescue program. A few kilometers from the end of the eight-year odyssey of the intervention, Athens sets a new course.
End of the Greek bank bailout