The Greek poor paid again for the crisis – new study

A new study entitled “Greece: Solidarity and Adjustment in Times of Crisis,” by Tassos Giannitsis and Stavros Zografakis,with the support of the Macroeconomic Policy Institute in Düsseldorf concluded that the increased Greek tax burden has fallen overwhelmingly on low income households

The authors specifically set out to examine how the austerity policies and reforms that successive Greek governments have implemented since the crisis began have affected different sectors of society, and whether or not the burden had been distributed equally.

The report shows that between 2008 and 2012, taxation, which made a 72.4 percent contribution to fiscal adjustments, was increased by 337.7% for lower income households, compared to just 9% for higher income groups.

The report also compared how the crisis affected the public and private sectors. Whilst between 2009-2013, average pay cuts in the public sector came to 8 percent, the private sector saw cuts of as much as 19 percent, widening 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 study claims that a “deficient crisis management approach and ideological inflexibility coupled to established political interests”  made “the exit from the crisis more complicated and painful.”

The study observed a sharp growth in income inequality between 2008-12, “amid growing poverty and total pauperisation of a substantial part of Greek society,” leading to the conclusion that the “emergence and persistence of such divides implies that certain categories of people have come out as winners from the crisis.”

See full study http://www.boeckler.de/pdf/p_imk_study_38_2015.pdf

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