My wife and I spent some time there last month. We saw up close how the country’s ongoing economic crisis is affecting Greeks on an island that’s essentially a small country town.
Skopelos’ economy has suffered in recent years, largely because Greece as a whole has seen a substantial drop in tourism. As I have written previously, Greece suffered from the long-running “occupation” of Syntagma (Constitution Square, the large plaza in the heart of Athens), with its violence and vandalism. Coupled with strikes that crippled transportation and other services — and caused great inconvenience for tourists and locals alike — the protests and unrest led many who might have visited Greece to turn to Turkey or other destinations.
This summer, things were marginally better. Thanks largely to a three-party coalition government that has targeted street crime in a manner reminiscent of Rudy Giuliani’s approach to New York City’s problems in the 1980s, Athens is noticeably cleaner and (we understand) safer than it was before. Because Athens is the gateway for foreign visitors to most islands, the new government’s actions have helped tourism in Athens and the islands, as well.
Still, times are tough; people are just hanging on. Gasoline on Skopelos costs about $9.50 per gallon. The country’s “value added” sales tax has been raised to 23 percent. Newspapers report black-market sales of cigarettes have increased dramatically because taxes now account for 84 percent of the price of a pack. Unemployment is 25 percent, and more than 50 percent for young adults.
From a policy standpoint, Greece is walking a tightrope. Government spending has been irresponsibly high for too long, and the examples of bloated government payrolls, excessive pensions for government employees retiring in their mid-50s, investment-killing regulations and cronysim are legion. Yet, cuts in government spending take money out of the economy. Even though drastic reductions are plainly required to bring the budget into balance, the surgery is delicate.
Our friend George is a retired merchant-marine engineer living on Skopelos. His pension has been cut by about 35 percent — from 15,800 to 10,000 euros. Nikos, a retired builder, tells us his monthly social security payment has been slashed from 980 to 800 euros. Greece has spent its way past the ability to grandfather people over a certain age. So these folks and many like them will have lower incomes and will necessarily spend less; this will have a ripple effect across the Greek economy.
On the other side of this equation, the government’s desperation for greater revenue has similarly adverse effects. Increased sales taxes, new property taxes, added regulatory costs and new business fees and taxes raise prices for consumers (including tourists), discourage job creation and drive economic activity underground. The culture of tax compliance we have in the United States is sadly lacking in Greece.
Another Nikos (“Nick,” as we’d say it, is a very common name), who owns a small car service and drives both business executives and tourists in the Athens area, tells us he was required to pay new fees and taxes of 3,000 euros (about $3,900) this year, over and above his income taxes. He says businessmen tell him they will not invest in Greece because nowadays “the laws change every week” — “you go to bed and in the dead of night the law is changed.”
Alexandra, who owns a couple of small hotels on the island, reduced her prices in order to maintain occupancy this summer. She says even her Scandinavian clients spend less money than in the past. When she cleans their rooms, she finds sugar, milk and other grocery products, indicating that they are taking very few meals in the tavernas and restaurants. Asked about Greek clients, she sighs and says, “Well, Greeks, we have the crisis,” as though it’s self-evident that Greeks are unable to spend as they did a few years back.
Our friends who run a taverna at Limnonari beach have reduced the wait staff. A few years back they had several servers. This summer, their niece Phylitsia, who was laid off from her job in Piraeus (the port of Athens), has moved in for the summer and is working in the restaurant. She left her 20-month-old baby with her mother and her husband, who continues to work in Piraeus. Similarly, at Panormos beach, our favorite taverna has laid off a waiter who worked there for years. He’s been replaced by the owner’s daughter-in-law. In the past, she would have been a full-time young mother; now, she is waiting tables.
These are but a few examples of many. Greece is not an affluent country like some in western and northern Europe, and its circumstances are (for now, at least) more dire than those elsewhere in Europe and in North America. Still, one could do worse than follow the story of Greece and its difficulties, for there are lessons here to be learned.
Ray Hartwell is a once and future Calhoun County resident who spent some time in Greece this summer.