The office of the alternate minister of labour, Govt. of Greece is located at the Korai street, just outside the Panepistimio metro station in Athens. I was there to meet the minister Prof. Rania Antonopoulos. She was welcoming and warm. She was gorgeous as always and I talked to her with the ease of talking to your favourite professor after a good class. Part of our half-an-hour conversation was somewhat like this:
Question: The Syriza government won popular support against austerity and growing inequality in the country. Also, two years back, the referendum of 2015 has clearly given a mandate to oppose the bailout conditions to the debt-crisis jointly proposed by the IMF (International Monetary Fund) and the ECB (European Central Bank). What happened after that?
Answer: Frankly speaking, we were too optimistic and the balance of powers in the European Union proved inhospitable to the very much needed changes. In the midst of a severe crisis, we could not implement expansionary fiscal policy because of opposition to Keynesian policy. We could not get out of the Eurozone because of some serious constraints, and therefore we did not have room to maneuver in terms of monetary policy. There was political will on our part and we negotiated relentlessly. Still it did not generate policy space. It was frustrating because we could not provide the radical alternatives, the necessary changes for getting out of the slump, to the people of Greece. Personally, I was so disappointed at one point of time that I seriously thought of quitting. However, that wouldn’t have made the situation any better. The prime minister did the right thing: We had a second election in September 2015, after it had become clear that austerity and other conditionalities were here to stay. Alexis Tsipras said “Let the people decide whether we should be in or out of the office”.
Question: Why can’t Greece come out of European Union? Most of the people in Greece seem to be in favour of an exit. What are the real constraints?
Answer: That is not true. People want to stay within the Eurozone and the EU. Firstly, our government debt is primarily foreign debt in nature. Unless we could repay substantial portion of it, that would have required to default on our debt with disastrous implications. We needed global allies to help us in this situation. Secondly, Greece is not self-sufficient vis-à-vis fuel, food and industrial equipment. We depend heavily on imports. Who would have come to the rescue, the USA, Russia, China? Therefore, it was next to impossible to take the risk of being socially ostracized in the European community even for one year. There would have been an acute problem of food security.
Question: What do you exactly mean by lack of Keynesian policy options? Expansionary policy might also reduce the deficit and debt to GDP ratio if the government expenditure and tax or revenue buoyancies are sufficiently high?
Answer: Some of my own calculations also show that this would be the case in the context of Greek economy. However, the tax buoyancy and the effectiveness of the government expenditure is lower here because of very high degree of tax evasion. Tax avoidance is widespread, rampant and systemic in Greece – even the present government could not make much dent in this front. But the main problem is the conditionalities imposed by the International Lenders. They want us to cut government spending!
Question: What is the main problem of Greece economy today? It seems the unemployment rate is extremely high here.
Answer: Unemployment is the biggest challenge today in the Greek economy. The overall unemployment rate was 23.5% in 2016 but, let me remind you that in 2013 it was 27.8%. When we took office it was 26.8. So there is a steady, but small improvement. I am certain this year it will be around 21.5%. We have created over 200,000 jobs in a very difficult environment (the population of Greece is around 10.75 million). The youth unemployment rate in the job-searching age was 55% and today it is 45%. The wage rates have come down below the subsistence level for many jobs. The situation is really bad. Still in 2014 there was a wage decline in all 10 main sectors in the economy. Today there is an increase in 7 out of the 10. Small steady improvement is visible.
Question: You used to argue in favour of implementing some kind of the ‘employment of the last resort programme’ in the Levy Institute of Bard College (where we met first). What are you doing to combat the unemployment problem in Greece?
Answer: Yes. We are working hard in this direction. We have created a total of 100,000 more jobs. The duration is 8 months and it pays minimum wage plus medical and retirement benefits. But, that is not enough. We are negotiating with the European Commission for giving us some concession with respect to the fiscal deficit so that we can spend at least 1% of GDP on the employment generation programme for the livelihood of the people. What is important is that this expenditure is permitted not to enter into the deficit calculations. Otherwise, even if we find the funds for such a scaled up intervention our hands will be tide due to the MoU with the Lenders.
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