The Greek economic crisis had a deep and widespread impact on the country, inflicting greater pain on ordinary people than the 2008-09 global financial crisis unleashed on the people of eastern Europe, according to a comprehensive new study from the European Bank for Reconstruction and Development (EBRD).
The findings appear in the latest of the Bank’s Life in Transition Survey (LiTS), a wide-ranging survey that shows how people’s lives have been shaped by political and economic upheaval in the region over the last 25 years.
This third survey, after earlier iterations in 2006 and 2010, is the largest so far and questioned 51,000 households in 34 countries*, mainly from transition countries in central and eastern Europe as well as Turkey. It also covered Cyprus and Greece for the first time. For the sake of comparison with more prosperous western neighbours, LiTS III was also carried out in Germany and Italy.
The economic crisis in Greece was deep and long-lasting. By the end of 2015, GDP had contracted by 26 per cent compared to 2008 levels. Total unemployment went up by 17.1 percentage points and youth unemployment increased to nearly 50 per cent.
According to LiTS III, 92 per cent of Greek respondents say the crisis affected them “a fair amount” or “a lot”.
76 per cent of respondents experienced a negative income shock such as reduced wages or pensions, job losses, delayed or suspended wages and decreased working hours between 2010 and 2016, compared with one in two households in the transition region and about one in three in western Europe in 2008-10.
Almost 44 per cent of Greek households saw their wages or pensions reduced during 2010-16.
In more than 24 per cent of the interviewed households, at least one member lost their job.
Over 51 per cent of affected Greek households reduced their consumption of necessities, such as staple foods and medicines, as a result of the crisis.
“Compared to eastern European households interviewed as part of LiTS II in 2010 (who also reported a deep impact of the recent crisis), Greeks have had to resort to cutting the consumption of necessities, non-necessities and services to a greater extent,” the report says.
The report highlights different ways Greeks coped with the crisis. According to LiTS III data, over 94 per cent and over 51 per cent of affected households had to reduce the consumption of non-necessities and necessities, respectively.
Female-headed households were more likely to have reduced their consumption of necessities than families headed by males, while a higher percentage of male-headed households counteracted the crisis by increasing their working hours or getting an additional job.
The survey revealed a widespread distrust of national political institutions in Greece, with around 70 per cent of respondents blaming political parties for the economic crisis.
The crisis in Greece has had a major impact on life satisfaction levels amongst the people.
Today, only 1 in 10 Greeks are satisfied with their financial situation and only 24 per cent of respondents say they are satisfied with their life in general, as opposed to 72 per cent in Germany and 42 per cent in Italy.
Greece has the lowest proportion of respondents satisfied with their lives of all the 34 countries surveyed.
After enduring a number of extremely difficult years, the picture going forward for Greeks does not appear much rosier. Only 16 per cent of the respondents in Greece believe their situation will improve over the next four years, compared with 48 per cent in post-communist countries and 35 and 23 per cent in Germany and Italy, respectively.
“This signals that, despite the recent political changes and attempts at economic reforms that have taken place in the country, Greeks do not see their situation improving for the foreseeable future”, the report concludes.
In addition to this section on the impact of the crisis on Greece, the report also focuses on levels of life satisfaction and corruption in the transition region and on the continuing gender gap, particularly in the labour market.
*The “transition region” in this report refers to the EBRD’s countries of operations that are covered in the third round of the Life in Transition Survey (LiTS): Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Estonia, FYR Macedonia, Georgia, Hungary, Kazakhstan, Kosovo, the Kyrgyz Republic, Latvia, Lithuania, Moldova, Mongolia, Montenegro, Poland, Romania, Russia, Serbia, the Slovak Republic, Slovenia, Tajikistan, Turkey, Ukraine and Uzbekistan.
It also includes Cyprus and Greece, which became recipient member countries of the EBRD in May 2014 and March 2015, respectively. The Bank’s involvement in both countries is expected to be temporary, with no new investment after the end of 2020.
The survey was also implemented in the Czech Republic. Please note that the EBRD ceased making new investments in the Czech Republic in 2007 but still manages a portfolio in the country.
Western Europe refers to the comparator countries – Germany and Italy – which allow us to benchmark the transition region against some advanced market economies, thereby giving a clearer perspective on the remaining challenges facing transition countries.