page_title: Greek government-debt crisis countermeasures
section_title: Economic and social effects of austerity measures
hierarchical_section_title: Greek government-debt crisis countermeasures / Economic and social effects of austerity measures
caption_attribution_description: English: Chart of number of people employed, unemployed, inactive over time and of unemployment rate over time (monthly; January 2004 - September 2014) in Greece; age group 15-74 years old; seasonally adjusted data; source: Hellenic Statistical Authority (EL.STAT.).
context_page_description: The Greek government-debt crisis is one of a number of current European sovereign-debt crises. In late 2009, fears of a sovereign debt crisis developed among investors concerning Greece's ability to meet its debt obligations because of strong increase in government debt levels. This led to a crisis of confidence, indicated by a widening of bond yield spreads and the cost of risk insurance on credit default swaps compared to the other countries in the Eurozone, most importantly Germany.
context_section_description: In exchange for European funding Greece was forced to impose strict fiscal austerity. As early as 2010 some economists expressed fears that the negative impact of tighter fiscal policy could offset the positive impact of lower borrowing costs and social disruption could have a significantly negative impact on investment and growth in the longer term. In a 2003 study that analysed 133 IMF austerity programmes, the IMF's independent evaluation office found that policy makers consistently underestimated the disastrous effects of rigid spending cuts on economic growth.
  US economist Joseph Stiglitz has also criticised the EU for being too slow to help Greece, insufficiently supportive of the new government, lacking the will power to set up sufficient "solidarity and stabilisation framework" to support countries experiencing economic difficulty, and too deferential to bond rating agencies.
  Overall the increase in the share of the population living at "risk of poverty or social exclusion" was not significant during the first 2-year of the crisis. The figure was measured to 27.6% in 2009 and 27.7% in 2010 (and only slightly worse than the EU27-average at 23.4%), but for 2011 the estimated figure rose sharply above 33%. According to an IMF official, austerity measures have helped Greece bring down its primary deficit before interest payments, from €24.7bn (10.6% of GDP) in 2009 to just €5.2bn (2.4% of GDP) in 2011, but as a side-effect they also contributed to a worsening of the Greek recession, which began in October 2008 and only became worse in 2010 and 2011. By 2012, wages have been cut to the level of the late 1990s. Purchasing power equals that of 1986.
  
  Overall the Greek GDP had its worst decline in 2011 with −6.9%, a year where the seasonal adjusted industrial output ended 28.4% lower than in 2005, and with 111,000 Greek companies going bankrupt (27% higher than in 2010). As a result, the seasonally adjusted unemployment rate also grew from 7.5% in September 2008 to a record high of 25.1% in July 2012, while the youth unemployment rate during the same time rose from 22.0% to as high as 55%.
  In an economy without a welfare regime to speak of, the impact of five consecutive years of recession has taken its toll. Charitable foundations that used to fund educational programmes have taken a big hit themselves in their bank deposits and have now shifted to paying for soup kitchens on the streets of Athens. Neighbourhoods are marked by buildings that owners are desperate to sell or rent and a major increase in the homeless sleeping rough. Almost half of Greece's young people are unemployed, as are one in five of their older peers. Despondency is everywhere, despite the "rescue". If future Greek governments keep to the terms of the bailout, by 2020 public debt will be back to what it was when the crisis erupted in 2009.
  "[F]ood aid, in a western European capital?" remarked one appalled BBC journalist, before observing: "You do not measure a people's ability to survive in percentages of Gross Domestic Product." Another BBC reporter wrote: "As you walk around the streets of Athens and beyond you can see the social fabric tearing." The social effects of the austerity measures on the Greek population have been severe, as well as on poor and needy foreign immigrants, with some Greek citizens turning to NGOs for healthcare treatment and having to give up children for adoption.
  The suicide rate in Greece used to be the lowest in Europe, but by March 2012 it had increased by 40%; Dimitris Christoulas, a 77-year-old pensioner, shot himself outside the Greek parliament in April because the austerity measures had "annihilated all traces for my survival". Patients with chronic conditions attending treatment at state hospitals in Athens are told to bring their own prescription drugs.
  In June the previous year, at the time of the Greek parliaments approval of the fourth austerity package, an independent United Nations official had cautioned that this additional package of austerity in Greece could potentially pose a violation of human rights, 
caption: Employment and unemployment in Greece over time.
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