Greece is a country often associated with its turbulent financial history.
A decade ago, it teetered on the brink of financial collapse.
Today, it is one of the fastest-growing economies in Europe, regularly outperforming the Eurozone average since the pandemic.
However, the country’s economic growth has not translated into meaningful improvements in the living standards of its citizens.
In a 24-hour general strike on November 20, thousands of Greek workers protested across the country, with disruptions in shipping, transport, and public services.
Protesters demanded immediate government action to protect their purchasing power, which has been eroded by inflation far outpacing wage and pension increases.
A decade of debt and recovery
Greece’s economic challenges date back to its sovereign debt crisis from 2009 to 2018.
During this period, Greece borrowed over €280 billion in bailout funds from its European partners and the International Monetary Fund (IMF).
In return, it implemented harsh austerity measures, slashing wages and pensions and privatizing public assets. By 2020, its debt-to-GDP ratio peaked at an astronomical 207%.
Fast forward to 2024, and the picture looks dramatically different.
Greece has regained investment-grade status and reduced its debt-to-GDP ratio to 162%, with further reductions to 149% expected by 2025 and 133.4% by 2028.
For a country once deemed the Eurozone’s weakest link, this is a remarkable turnaround.
Source: Bloomberg
But this recovery has come at a cost. The austerity measures implemented have wiped out a quarter of its economic output.
And while GDP has rebounded, wages and living standards have not kept pace.
Growth that hides inequality
Greece’s economic growth is undeniably impressive. Over the past few years, Greece has consistently outperformed its peers, with robust public and private investment driving its recovery.
The IMF predicts GDP growth of 2.3% in 2025, more than double the Eurozone average of 1.3%.
This growth is the result of fiscal discipline. Greece has prioritized reducing its debt through early repayments, with the finance ministry planning to repay €8 billion of bilateral debt between 2026 and 2028.
These measures have boosted investor confidence and lowered borrowing costs, with the yield premium on Greek bonds now at its lowest since 2008.
Despite the booming economy, however, Greece remains one of the poorest countries in the Eurozone. According to OECD data, purchasing power is among the lowest in Europe, with only Bulgaria ranking lower.
The minimum gross monthly wage has risen from €650 in 2019 to €830 today and is set to reach €950 by 2027.
But for many Greeks, these increases are insufficient to offset the rising costs of food, energy, and housing.
Workers report that their purchasing power has been reduced by as much as 50% compared to pre-crisis levels.
Why is inflation hitting workers so hard?
Inflation affects everyone, but its impact on workers is especially pronounced when wage growth lags behind rising costs.
According to Greece’s largest private-sector union, GSEE, basic goods are increasingly out of reach due to practices by “oligopolies” that keep prices artificially high.
For instance, energy prices—already elevated across Europe—have been particularly challenging in Greece, where lower wages amplify the burden on households.
While the government has reduced taxes on certain goods and services, unions argue that these measures have not been enough to offset the cost-of-living crisis.
How has the government responded?
The Greek government has acknowledged these challenges but insists that fiscal discipline remains essential.
Finance Minister Kostis Hatzidakis recently emphasized the importance of maintaining primary surpluses and reducing debt to attract investors and ensure long-term stability.
The 2025 budget reflects this approach. It includes €1.1 billion in additional spending to fund wage and pension increases while projecting GDP growth of 2.3%.
The government has also raised the minimum wage four times since 2019 and increased pensions to support vulnerable groups.
Prime Minister Kyriakos Mitsotakis has called on the European Union to address disparities in power prices across member states, arguing that high energy costs are disproportionately affecting countries like Greece.
However, critics argue that these measures fall short of addressing the root causes of Greece’s economic inequality.
Lessons from the crisis
Greece’s economic recovery offers valuable lessons for other countries navigating post-crisis environments.
First, fiscal discipline and structural reforms can deliver results, as evidenced by Greece’s debt reduction and improved investor confidence.
But Greece’s experience also highlights the risks of focusing too heavily on macroeconomic indicators while neglecting the lived experiences of ordinary citizens.
Rising GDP figures mean little to workers whose wages have stagnated and whose purchasing power has eroded.
For Greece to achieve sustainable growth, it must find a way to combine fiscal responsibility with policies that address inequality.
This includes tackling inflation, strengthening social safety nets, and ensuring that wage increases keep pace with living costs.
What’s next for Greece’s economy and workers?
Greece’s ability to overcome these challenges will determine the long-term success of its recovery.
While the country’s economic turnaround is impressive, its citizens are still grappling with the legacy of austerity and the pressures of rising inflation.
As Greece enters its next phase of recovery, the government must focus on ensuring that growth benefits everyone—not just investors and creditors. For a country that has already overcome so much, this is the next step in building a truly resilient economy.
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