July 15 (Bloomberg) -- For Prime Minister Antonis Samaras, the tangible signs of Greece’s recovery are the tourists pouring into Athens from cruise ships and airplanes. Olympia Angeli says she’s lucky those tourists keep her employed.
The 28-year-old is clinging to the security of working as a waitress even as her wages have fallen by half in three years. Nor does she know when she can return to her studies in tourism management: She can’t afford to lose her 500-euro ($652) monthly take-home salary, needed to support her aging parents.
“A lot of people moved back home because of the crisis so their parents could support them,” she said in the historical neighborhood of Plaka at the foot of the Acropolis. “But I’m an only child and I never moved out. I support my parents, help pay the rent, help look after them.”
Not becoming one of the 1.3 million people out of work is an abiding concern for the 3.6 million Greeks still holding a job in the sixth year of the slump, now being called one of the deepest peacetime recessions of any industrialized economy. Gross domestic product has dropped 22 percent since 2008.
The ancient marble streets and squares of Athens, many now inhabited by beggars and once thronged by angry protesters, show the price citizens are paying for their leaders’ policy mistakes. Even as exports rise in Italy, Portugal and Spain and investment by U.S. companies returns to Ireland, Greece remains the poster child for the euro’s three-year existential struggle.
“Greece has the holy trinity of crises,” said Andreas Koutras, an adviser at the Lucerne, Switzerland-based investment company SteppenWolf Capital LLC, an investment fund that holds Greek debt. “It has a public debt crisis, a bank crisis and a cultural-political crisis. These are self-feeding. Greece has become the lighthouse of Europe: Steer well clear of that area.”
While wage and pension cuts have slimmed the country’s deficit, a slump in consumer confidence, a failure to tackle tax collection and a 2013 debt burden the International Monetary Fund says will hit 175 percent of GDP are keeping up the pressure.
A state-asset sales plan underpinning 240 billion euros in pledged aid has been repeatedly overhauled as buyers fail to appear, even after German Chancellor Angela Merkel vowed to prevent a euro exit.
The International Monetary Fund and European Union program for Greece has left the country on a different trajectory than those of Ireland or Portugal, Bruegel, a Brussels-based research institute, said in a May report. It compared the effectiveness of the loans-for-austerity policies imposed on the three euro-area nations.
“The Greek program may still achieve its ultimate goal of keeping Greece in the euro area and of making it able to recover and grow,” the report said. The IMF and the EU “have had to commit many more resources and for a much longer period than initially envisaged and results remain deeply disappointing and the ultimate outcome uncertain.”
The unemployment rate of 27.4 percent is more than double that when Greece started receiving the first installments of its international bailout in May 2010, jeopardizing the gains made retooling an economy that plunged Europe into the debt crisis. The rate will still be 21 percent by 2016, according to an IMF forecast published June 5.
Angeli said she stuck with waiting tables to avoid joining the people who ended up leaving the country to find work.
“I could have left two years ago with a friend who went to the U.K.,” Angeli said as she sipped coffee in Plaka. “She abandoned her studies here. She saw only darkness, darkness, darkness and said ‘I’m not going to drown in this.’”
The friend got a job working in a pub on her first day in London and is planning to buy an apartment, Angeli said.
Signs of progress were visible as recently as last April, when Samaras, 62, persuaded the troika of the IMF, EU and European Central Bank to release more loans. The premier declared Greece was on the road to recovery.
“Many say that it is darkest before the dawn,” he said April 16, a day after the accord. “Today we believe, more than at any other time, that it is starting to dawn.”
Borrowing costs dropped to their lowest since they were part of the biggest restructuring in history in March last year and the Athens Stock Exchange soared 142 percent from its June 2012 low to a high of 1,152.60 on May 17.
Then everything unraveled. In June, the country failed to draw any bids for the sale of national gas company Depa SA, punching a new hole in finances. Samaras’s decision to shut the national broadcaster to reduce the state payroll backfired when coalition partner Democratic Left quit the government in protest. That raised the specter of early elections that polls show would be as inconclusive as last year’s.
The party that continues to make inroads is the anti-immigrant Golden Dawn, with its red, white and black flags reminiscent of Nazi swastikas and food parcels only for those of Greek blood.
Even an agreement by European governments to parcel out funds, including 2.5 billion euros in July, hasn’t kept the stock index from becoming the worst performer year-to-date among 18 western European markets. Greece’s benchmark 10-year bond yield, while it has decreased from a 2013 high of 13.04 percent on March 27 and was as low as 8.10 percent on May 22, was 10.67 percent on July 12.
Unions have signaled they’ll fight plans to put 25,000 public servants in line for possible dismissal by calling a general strike for tomorrow. Samaras’s reduced majority of 155 lawmakers will be asked the next day to vote through the legislation needed to receive the funds.
The government is still struggling to make everyone pay their fair share in taxes.
The tax crimes squad conducted 841 checks on June 21-24 on companies in tourist areas including Santorini, Mykonos, Rhodes and Skopelos. Of that number, 381 were found to be breaking tax rules for a total of 822 infringements, such as not issuing receipts, not paying sales tax, not registering visitors at hotels or not registering employees.
Even after restructuring, Greece’s debt will only fall to 124 percent of GDP in 2020, according to the IMF June report. The country owes 318 billion euros, mostly to the IMF and euro-area taxpayers, Alternate Finance Minister Christos Staikouras said on July 3.
“I don’t see any change at all in the sheer size of the debt,” said Bruce Stout, manager of the 1.5 billion-pound ($2.3 billion) Murray International Trust at Aberdeen Asset Management in Edinburgh and a visitor to Crete this year. “For a generation it’s all they’ve ever known: debt.”
That’s not obvious to the Germans, Italians, Americans and Australians milling around the New Acropolis Museum, across the street from where Angeli works. On a recent day, street entertainers in shorts and beanies breakdanced on the walkway.
Just a few minutes’ away there are graffiti-scrawled neighborhoods, where Greeks and others sleep in the doorways of banks and stores. Similarly, the airport buses disgorging tourists onto the streets of the main Syntagma Square opposite parliament are often greeted by beggars crouched on the edge of sidewalks, hands outstretched.
Angeli, who lives in a rented apartment with her parents, age 77 and 65, says she turned down her first offer of a university place studying history at Ionian University because “history doesn’t put food on the table.”
She was accepted into an Athenian technical institute that teaches how to run companies in tourism, an industry accounting for 16 percent of GDP and one in five jobs, according to the World Travel and Tourism Council.
Angeli considers herself lucky because she’s managed to support herself throughout the crisis even “as businesses shut down one after the other.” She is hopeful that she can return to finish her degree so she can open her own business or at least move up to managing one.
“It’s not total darkness; there’s a dawn maybe,” she said before heading back to work. “But it’s still really far in the distance. It’s taking a long time.”
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