The economy of impoverishment is collapsing, with the government cutting off billions from the Recovery Fund
These are disastrous political choices that poison the real economy. His choice Kyriakou Mitsotakis to create an oligopolistic environment, where the few are subsidized by the 70 billion community programs and profit grudgingly and the many (salaried, retired, small and medium) suffocate under the weight of the inflation of greed, brings consequences. Reading the memorandum of the Bank of Greece (BoG) concerning the minimum wage, the questions arise:
How is it possible, in conditions of continuous flow of money from the Recovery Fund and the NSRF, that the gross fixed capital formation decreased by 3% in 2023 (measured by the Central Bank at 7.4% in the nine months of 2023 compared to 10.4% in the corresponding period of 2022);
How is it possible that the Greek economy fell seven places in the ranking of the macroeconomic performance of the Structural Competitiveness Index in 2023 compared to 2022 (from 51st in 2022 to 58th in 2023 in a total of 64 countries, according to the global competitiveness ranking of the Institute IMD, whose reliability is not disputed by the SC?
How is it possible for the efficiency of the public sector to improve even marginally (53rd from 55th place) and for the efficiency of the private sector to decline (48th from 46th place), while the hawks of neoliberalism in Greece are constantly sending money to the few (the 18 billion of the Recovery Fund will the 480 companies in Greece with a total of 1.3 million professional VAT numbers reap?
The wrong choices
All of this, as much as it is an oxymoron, if contrasted with the celebrations of Mitsotakis and Kostis Hatzidakis, is the result of Mitsotakis’ choice to take advantage of the European Central Bank’s (ECB) quantitative easing in the two years 2020-22 – which also lavishly bought Greek bonds (about 44 billion euros) – to support the closed European economies that were suffering from the pandemic. All these loans became direct assignments and crumbs for many. This is how the public debt increased dramatically in absolute terms, without there being any serious and qualitative production upgrades in the sectors of the economy that would offer real growth to the GDP, such as industry.
But with the money supply, inflation took off and the rest of the European states started to support society with large wage increases. But not in the Greece of Mitsotakis, where the income was never replaced based on the course of inflation – especially as it was formed in basic goods.
The great contradiction
So this is where the big problem comes in: while society is on its knees due to profiteering and the non-replenishment of incomes, the international competitiveness of the Greek economy is declining despite the fact that unit labor costs are kept low. In this area, the memorandum of the Council of Ministers states: “In the period 2020-2022, the improvement of competitiveness was more spectacular in terms of labor costs per product unit…”.
As the BoE observes, the Harmonized Competitiveness Index of Greece based on unit labor costs in Greece increased in 2023, but at a significantly lower rate than that of the main trading partners. Nominal labor costs in 2023 in the entire economy are estimated to have increased in Greece by just 0.7%, while the corresponding increase in the euro area was 4% according to the European Commission and 6.1% according to the ECB. It is therefore easy to conclude that while the rest of Europe is supporting societies to withstand the inflationary crisis with wage increases, the Greece of Mr. Mitsotakis is celebrating the tax-inducing GDP growth and the profits of a few businesses that act at the expense of the many.
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