Greece: latest news of a tragedy…

(All my thanks to Anne-Marie de Grazia for her translation)

The situation in Greece is relentlessly deteriorating. With the country under intensive care of the European Union and the IMF, the social situation of the country is continuing to degrade. We called attention on this in a previous note. Recently published statistics confirm it. Austerity is tantamount to a massacre for part of the population, particularly the most exposed groups such as those aged over 60, but also small children.

Meanwhile production continues to slump, which brings about a slump in taxes such as the VAT, the revenue of which decreased by 12% between October 2011 and October 20121. We can see unemployment literally exploding (ELSTAT – Unemployment data) and, along with it, the real income of the population is contracting very quickly. Unemployment reached, in September 2012, 26% of the active population and, at the present rate of progression, it should reach 33% in the course of 2013.

Chart 1

Sources : ELSTAT, Labour Force Survey, September 2012, published December 6th, 2012.
URL : http//

It is particularly significant that youth unemployment (for those aged under 25) is literally exploding. Reaching beyond 55%, it is of particular significance in that it translates into facts the hopelessness of a whole generation of young Greeks. The psychological dimension of the phenomenon is decisive here, with the youngest part of a population losing all hope in the future.

Chart 2

Sources : ELSTAT, Labour Force Survey, September 2012, published December 6th, 2012.
URL : http//

Within the general disaster, one notices significant regional differences. The unemployment rates are significantly lower in the Aegean Islands and in Crete (22.5% and 20.0% respectively), but distinctly higher in Attica (the region around Athens) and in Epirus (27.6% and 28.0%, respectively). But in the case of Crete, a seasonal dimension is clearly showing, in relation with tourism. The unemployment rate has increased steeply until April, to decrease later, with the beginning of the tourist season.

Chart 3

Sources : ELSTAT, Labour Force Survey, September 2012, published December 6th, 2012.
URL : http//

All this has a considerable impact on household consumption, which we are examining here on the basis of retail trade data expressed in volumes (to avoid any inflation effect). Over one year (from September to September) the drop in the retail trade is very important. The tourist season (May to September) being included in this period, one can suppose that the contraction was even stronger for the Greek population. Fairly logically, the drop in the volume of sales is most important for “non-alimentary goods, excepting fuel.” It remains nevertheless spectacular in the case of alimentary goods (-9.2%).

Chart 4

Sources : ELSTAT, Turnover Index in Retail Trade, September 2012, published November 30th, 2012.
URL : http//

Still, the slump in retail trade over one year must be analyzed from the standpoint of the development of barter trade and of local (parallel) currencies. It is probable therefore that the effective decrease in food consumption has been less considerable in reality because food stuffs constitute the first basis of barter. But, even if it was inferior to the -9.2% of official data, this decrease in food consumption remains very significant. One would wish to have more detailed data-by-product available. One can nevertheless surmise that it is the consumption of so-called « noble » products which has dropped the most. Moreover, these data represent averages. If one takes into consideration the lower median of the population (the 50% whose income is below the mean), the drop in food consumption has certainly been more important then what average data indicate.  Globally, all indicators converge to paint a truly alarming image of the situation of the Greek population. There are indications of a resurgence of illnesses such as malaria, paludism and tuberculosis. A certain number of grave illnesses (notably cancers, but also diabetes) are no longer taken care of by the public health system2.

If the development of barter and of parallel currencies constitute tools of resilience in the face of a very rapidly degrading economic situation, as this was the case in Russia, they cannot prevent this degradation to occur. The mortality rate will, quite certainly, increase sharply in the coming months and years, as could be observed in Russia at the beginning of the transition years  in the 1990s.

The situation is by now so much degraded that one can doubt that Greece will reach the next summer in its present state. It is certainly impossible for Greece to wait until 2015 for a hypothetic, even partial, annulment of its debt. The core problems, which have been most provisorily swept under the rug, will reappear in full force in the spring of 2013.


Jacques Sapir, “Greece: latest news of a tragedy…”, published on the blog Russeurope le 09/12/2012, URL:

  1. ELSTAT, Press release, Quarterly National Accounts, published December 7th, 2012, URL : http// []
  2. Grèce : hopitaux à l’agonie, CareVox, 6 décembre 2012, URL : []

Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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