Greece’s crushing economic crisis and attendant austerity measures have stripped Greeks of more than a third of their disposable income in the last three years, data from the country’s statistics agency ELSTAT said.
Pay cuts, tax hikes and slashed pensions imposed by the government on the orders of international lenders putting up $325 billion in two bailouts to prop up Greece’s economy have caused a record 27.2 percent unemployment and dropped the Gross Domestic Product nearly 25 percent since 2010.
The resulting squeeze on household budgets led to a 16 percent slump in consumption since 2009 when Greece’s debt crisis began, deepening the economic slump which is now in its sixth consecutive year. Other estimates about the loss in disposable income have been as high as 46 percent.
Weighed by record unemployment and wage cuts to make the country’s companies’ more competitive, total workers’ compensation fell by a quarter. To make matters worse for households, the government slashed social benefits by 15 percent over the same period to save money.
The crisis, accompanied by often violent street protests, did not stop the government from hiking taxes to plug its fiscal gaps. Households’ tax bills rose by 17 percent in 2010-2012, according to the figures, after the state increased taxes on income, consumption and property.
The statistics service said the protracted economic malaise also affected households’ savings rate, which fell 5.9 percent in the last quarter of 2012 versus a 2.8 percent drop in the same period in the previous year.
Greece’s battered economy is expected to contract 4.5 percent this year, based on government projections, before a recovery begins in 2014. This would bring total economic decline in 2008-2013 to almost a quarter – the country’s biggest peace-time recession.
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