‘The Troika Effect’ – European Unions: Greece lost 25% of its GDP

‘An investigation shows the economic and social impact of the Troika in the countries overtaken. Portugal registered the loss of 800,000 jobs, Cyprus suffered from an “unprecedented” unemployment rate

Greece lost 25 percent of its GDP since it has been undertaken by the Troika programme: a quarter of its activities has been literally destroyed. This is just one of the figures shown in the investigation carried out by ETUC (European Trade Union Confederation) into the activities of the Troika in the undertaken Member States (Greece, Cyprus, Ireland and Portugal). The ETUC presented the results of its own investigation today, at a hearing at the European Parliament, in front of the members of the Economic and Employment Committees. Data shown were enough for the ETUC to say the Troika ‘experiment’ was a “total failure” – not only for the Greek economy.

ETUC highlighted that Greece employment fell by 18 percent, investment collapsed and public debt still follows an upward trend: in 2013, it was 176 percent of the GDP. “In Greece, Troika’s austerity programme cannot coexist with social justice,” underlined the ETUC. “The reforms dismantled welfare systems, reinforcing extremist and intolerant elements of the society. Nationalism, racism and xenophobia fill the void caused by the lack of respect for democratic institutions.”

Yet, the situation in the other states subscribing a MoU is not very different. In Portugal, Troika’s austerity measures resulted in a steep decrease of internal consumption, which in turn created recession – and added a heavy burden to public finances. In 2014 in fact, according to ETUC, public deficit will (perhaps) meet the 4 percent of GDP ratio – a little decrease from the 4.4 percent ratio registered in 2010. In addition, public debt rocketed from 94 percent of GDP in 2010 to 127.8 percent in 2013. Finally yet importantly, a decrease of 15 percent of workforce – 800,000 jobs were destroyed.

Dealing with Cyprus, ETUC underlined “unprecedented” social consequences of Troika’s measures. Unemployment rate rocketed: from 5 percent in 2009 to 17.3 percent in September 2013. In addition, it is not going to stop there: according to the forecasts, it will be at 20 percent by the end of 2014. The situation is even worse for youth: 37 percent of them were unemployed in September 2013.

The situation appears a little brighter for Ireland: “The recovery would have been faster with a slower fiscal adjustment.” is the only comment. In any case, even Ireland registered a strong increase in the unemployment rate, from 9 percent in 2008 to 27.8 percent in 2012.

In the end, the effects of Troika’s measures in the ‘overtaken’ member states are questionable to say the least. Not only because of their economic and social effects but also, ETUC highlights, because of the lack of social dialogue: ““Fundamental principles of the European Treaty are to be respected at all times,” said Veronia Nilsson, Confederal Secretary at the ETUC. “The fact that programmes are elaborated under market and time pressure does not change this, on the contrary”.

Letizia Pascale