The misery of everyday life in Greece

The country's deep debt and punishing austerity measures have had a devastating impact on everyday life

Crisis in Greece
(Image credit: ARIS MESSINIS/AFP/Getty Images)

The country's deep debt and punishing austerity measures have had a devastating impact on everyday life. Here's what you need to know:

Who is affected?

Virtually everyone in Greece. Unemployment runs at 25 percent — twice what it was before the austerity program began in 2010 — while youth unemployment is at 50 percent. State pensions have been slashed by as much as half, and 30 percent of Greece's population now lives on or below the poverty line, including 40 percent of children. Soup-kitchen lines are filled with former middle-class professionals. In winter, a thick layer of smog hangs over Athens as residents who can't afford heavily-taxed heating oil burn wood to keep warm. Homelessness is rife. The suicide rate has risen by 45 percent. Many young professionals have fled the country altogether; Greece's population — now about 11 million — has fallen by 400,000 in five years. "Our children will grow up in a destroyed country," says Charalabos Nikolaou, a street vendor in Athens. "As prisoners, not citizens."

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What caused this debacle?

Greece spent far more than it could afford. For years, the government lavished vast sums on costly infrastructure projects, gold-plated civil service pensions, and a huge expansion of the welfare state, borrowing deeply to keep the good times rolling. Public-sector wages grew by 50 percent between 1999 and 2007; tax evasion and corruption were rampant (see below). But when the 2008 global financial crisis hit, Greece's folly was exposed: Its budget deficit was a staggering 12.7 percent of GDP — more than four times the Eurozone's prescribed 3 percent limit. (By contrast, the U.S. budget deficit will be 2.6 percent of GDP in 2015.) The "troika" — the European Commission, the European Central Bank, and the International Monetary Fund — agreed to two bailouts, in 2010 and 2012, worth a total of $277 billion; the terms of another, worth up to $94 billion, are currently being negotiated. But in return for these financial lifelines, the troika has demanded severe austerity measures, including pension cuts, state salary reductions, and mass public-sector layoffs. As a result, Greece's economy has crashed, and the country has been plunged into a downturn so severe, it resembles America's Great Depression.

What are the consequences?

With unemployment so high, nearly 20 percent of Greeks no longer have enough money to cover daily food expenses. Some soup kitchens are so oversubscribed, they now ask people for documentation of their poverty. About 40,000 Greeks are living on the streets, 25 percent more than in 2009. The so-called new homeless don't fit the traditional profile of people who sleep outdoors. "They are well dressed and well educated," says Dimitra Nousi, who runs a soup kitchen in Athens. "Until last year, they had a good flat or a nice car — and now they have nothing."

Which generation has it worst?

It's hard to say. The young endure the highest levels of unemployment. Baby Boomers are struggling to meet their financial responsibilities, like mortgage payments and children, and face a three-year waiting list if they want to retire and take their pension. Retirees scrape by on roughly half the money they used to receive. A typical example is Nikos Panagos of the port city of Perama, who had worked in construction for 45 years before losing his job during the crash. Initially, his state pension supported him and his six grown children, who had also lost their jobs. But when the payments were trimmed to just $444 a month last year, Panagos had to start lining up at soup kitchens and rifling through bins for food. "Austerity," he told The New Yorker, "has taken my dignity."

What are Greece's politicians doing?

They're largely powerless. If Greece still had the drachma, the treasury could simply print more money to prop up its economy and start paying off its vast debt. But because it's part of the Eurozone, the government's hands are tied, by Germany and other creditors. That powerlessness has enraged ordinary Greeks, who are shunning mainstream political parties in favor of anti-austerity extremists. Golden Dawn, an openly neo-Nazi party that has banned immigrants from its "Greeks only" soup kitchens, won 17 seats in this year's election — even though half its leaders were in prison on charges of running a criminal organization. The far-left Syriza party came to power in January on a promise to renegotiate Greece's bailout terms. But Germany refused a plea by the Syriza prime minister, Alexis Tsipras, for debt relief, and he recently agreed to additional pension cuts, tax increases, and other reforms in return for another bailout loan.

Is there any hope?

Not in the near future. Greece's debt — now about 180 percent of GDP — isn't sustainable in the long term. The EU is already preparing a huge humanitarian package to help cushion the fall if Greece exits the euro — the much-feared "Grexit." Many Greeks say they simply cannot continue to endure the status quo. "In the third round of austerity measures, which is beginning now," says Panayiotis Monemvasiotis, manager of a national bakery chain, "there will be no consumers — there will be only beggars."

Rousfeti and fakelaki

One of the biggest factors behind Greece's financial free fall is the country's endemic graft. So entwined is corruption with everyday life, the Greeks have special words for it: Rousfeti, which literally means "spoils," refers to the doing of small favors and distribution of jobs; fakelaki are the "little envelopes" used for the routine bribery of everyone from doctors to teachers. In 2010, a study by the Brookings Institution found that 8 percent of Greece's GDP (around $26 billion) was spent on bribes, and that 27,000 new public-sector jobs had been added to the payroll in the month before the country's previous election. "The parties used ministries to reward people," says Kyriakos Mitsotakis, the minister charged with sacking 25,000 public-sector workers in 2013. "The grand bargain was a job in the public sector for votes. But you needed to be able to finance the system. Fine, as long as money was flowing and loans easy. Now that they are not, you have no choice but to be efficient."

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