Harvard Sample Issues In World Development Rich World Poor World

Greek Economic Crisis 1

IMPACT OF THE GREEK ECONOMIC CRISIS

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Greek Economic Crisis 2

Impact of the Greek Economic Crisis

In 2008, a financial crisis that greatly paralyzed financial institutions globally took

root. It was from this financial crisis that Greece found itself in a debt crisis in 2009, which

culminated in the 2010, and onwards, economic crisis. A characteristic of the crisis was the

government being highly indebted and experiencing sharp structural deficits. Bailout

packages have been taken for a solution, but these come with harsh austerity measures.

Among the measures is a steep rise in taxation and minimized tax evasion, as well as an

overhaul of the existing structures of the governance. Additionally, cutting down on the

budget is also part of the scheme. The economic crisis has impacted Greeks in a number of

ways including decreased employment opportunities, inadequate health care, and

compromised quality of education. The current paper analyzes the impacts of the financial

crises on employment, the health system and the state of education. Existing sources and

knowledge of the development theory will be applied in the analysis.

Regarding employment rate, the crisis led to an increase of unemployment that

stemmed from an increased cost of living that was disproportionate with individual incomes.

With hiked prices on commodities, cut of government spending on salaries and the

redundancy of some job positions, unemployment rates were bound to be high. Notably,

unemployment rate from the start of the crisis in 2008 and even with the bailout and the

accrued austerity measures grew by 21% between 2008 and 2014 (Mantalos, 2015). At

around the same time, the income per household declined a whopping 23%, making

consumption per household inevitably go down (Mantalos, 2015). Decreased consumption

implied more unemployment as more businesses were likely to shut down.

Thus far, the measures adopted to curtail the high unemployment in Greece are yet to

show any significant progress. Restrictions on trade union activities, high reductions in both

public and private wage, contractual and rotational employment are some of the measures

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Greece has adopted to slow down the unemployment rate. However, as noted by Dimoulas,

the unemployed rate still remains high (2014). Notably, the over-reliance of Greece on

foreign loans and the dependence on state welfare to maintain desirable social aspects had

worked for as long as there were willing lenders (Dimoulas, 2014). Once loans were no

longer availed to Greece shortly after they had been charged high rates of interest, the

accrued benefit vanished. Consequently, the government was forced to cut down on the labor

budget in which the policies on active employment could no longer stand. This approach

became almost mandatory with the bailouts.

Further, the crisis brought about the closure of a significant number of public

elementary schools. Pupils were forced into schools that had been spared; overcrowded

classrooms and the low number of employed teachers imply deterioration in the quality of

education. Notably, higher education has also been affected by the crisis in which there is a

shortage of qualified college professors from the government’s decision not hire any more

(Heckenos, 2013). The approach may have saved the budget of the Greece government, but

the effectiveness of such a measure is only assured in the short term. The long-term effects of

such a measure can be dire (Dimoulas, 2014). Combined with the observed increase in

unemployment rates and lack of better terms with the trade unionist, Greece experiences

brain drain whose threshold is destructive to the Greece economy (Labrianidis & Vogiatzis,

2013). Such a pattern of events indicate the probability of another cycle of a financial crisis;

otherwise, the government should think long-term to restore the education standards and

reconcile the education with employment policies.

When education system is compromised in such a manner as is the case with the

crisis, the effective transfer of knowledge is curtailed. The long term effect is the production

of a young populace that is un-innovative, inadequately skilled for the necessary tasks and

clueless of the trends in a capitalist economy among other areas of skillful operation. Poor

Greek Economic Crisis 4

public education produces young adults lacking employability skills. Without proper

employment, proper income becomes elusive and this populace is likely to join the pool of

deprivation. At the nation-state level, the state will lack skilled personnel that can effectively

run the economy and lead it to sustained recovery. Consequently, Greece is likely to be

forced with time to import skills, which comes at an extra cost negating the bid to revive own

economy and nationhood.

In terms of health care, the economic crisis has not only impacted the efficiency of the

healthcare systems, but also the health of the population. Firstly, government spending on

health care had been on the decrease even before the beginning of the financial crises

reaching a high of 23.7% cut between the peak of the economic crisis (2009) and 2011

(Koindilis et al., 2013). Also, compared to other European health care budgets, the Greek one

is at the bottom. With less financing of healthcare as a public good, the availability of needed

facilities for healthcare is limited forcing people to seek care in the private sector. However,

with the inflation rate arising from the austerity policies, only a few rich people are able to

afford private care. The majority of the population is then forced to travel long distances in

search of affordable care or resign to fate. The effect of inaccessible health care is an increase

in mortality and morbidity rates, which decreases the productivity of the population. With an

unproductive population, it becomes even harder to pay off the debts and remain with a

surplus that can sustain the population.

Secondly, the increased living cost and mass unemployment force people to result

habits that put their health at risk. For instance, with an increased price on heating oil, many

low-income earners had turned to the use of wood for heating by 2013 (“Explaining Greece’s

Debt Crisis,” 2016). The resolve not only affects their lung health but is also degrading for

the environment. Also, in an attempt to cut on the expenditure, many people are likely to

engage in unhealthy food and lifestyle habits, which add to the health care burden, especially

Greek Economic Crisis 5

in the long term. Consumption of cheap junk foods and sedentary lifestyle is common among

those living in deprivation, which increases the probability of increased lifestyle diseases

such as diabetes and obesity. Also, unhealthy lifestyle habits such as smoking and abuse of

substances are common among the socially and economically deprived; it is the case with

Greece (Kondilis et al., 2013). Such unhealthy habits such as substance abuse have also been

implicated in an increase in criminal behavior, including violence. Jessop reports on

increased street violence in Greece as a consequence of the economic crisis and the resulting

deprivation as well as mental instability (2012).

Jessop further notes that with a disrupted supply chain of the pharmaceutical

industry, the increased demand for medications due to a growing number and range of illness

during the economic crisis cannot be met (2012). The situation worsens with the end of the

welfare state that ensured affordability of prescribed medications; worse still is the decline in

the economic capacity by individuals to afford even basic necessities. In such situations

where people are forced to use cash to pay for a limited supply of medicines, basic care is

likely to be viewed as a luxury.

Finally, with less to live on, many people have been driven into relative deprivation.

The result is psychological problems such as stress and depression in the long term; these

mental conditions can be incapacitating in the least but prolonged depression is also

positively correlated to suicide rates. The suicide rate, in Greece, increased by 22.7% from

the beginning of the financial crisis (2007) to 2009 among the male population (Kondilis et

al., 2013). The increase of suicides with the economic crisis is a wake call to governments to

put in place measures that can be easily mobilized to adequately prevent and manage mental

disorders in the event of a future crisis. Poverty and social exclusion as a result of the

economic crisis have also led to increased homelessness in Greece which further predisposes

more people to health risks and criminal victimization (Kougias, 2014). Notably, homeless

Greek Economic Crisis 6

persons are unlikely to consider attending school as they busy searching for basic survival

means. It contributes to a retrogressive kind of development.

In summary, from the effects of the bailouts that Greek readily accepted as a solution

to its debt crisis, it is clear how the capitalist system works to maintain the status quo; the rich

get richer, and the poor even poorer. Greece had for long relied on foreign loans to develop

itself and run its economy. A similar trend of borrowing is also observed among the other

countries in the economic ‘periphery' of the Eurozone such as Spain, Italy, and Portugal

(Labrianidis & Vogiatzis, 2013). The ‘periphery’ states had heavily relied on borrowing from

the ‘core’ states such as Germany and France before the global economic crisis, as noted by

Labrianidis and Vogiatzis (2013). The dependence of Greece on foreign loans and later on

foreign aid in form of bailouts contributed to its current economic crisis (Haslam, 2015).

Once the world financial system faltered and loans had to be recovered at higher interest

rates, Greece found itself in an irreconcilable debt. When the country was on the verge of

bankruptcy, it had to be bailed out to protect the interests of the Eurozone as well as prevent a

possible spill-over effect (‘Explaining Greece’s Debt Crisis,’ 2016). The economic crisis that

followed the bailouts due to imposed austerity measures will be reckoned even in years to

come. Increased rate of unemployment and cost of living not only has led many Greeks to

live in deprivation in all aspects of the term but also led to a wave of emigration that gives

rise to a brain-drain and increased reliance on imported skill. Suffice it to say that

dependency on external loans and foreign aid is not a sustainable way of development in a

capitalist society.

Greek Economic Crisis 7

References

‘Explaining Greece’s Debt Crisis,’ 2016, New York Times, June 17. Available from:

https://www.nytimes.com/interactive/2016/business/international/greece-debt-crisis-

euro.html?_r=0

Dimoulas, C., 2014, 'Exploring the impact of employment policy measures in the context of

crisis: The case of Greece', International Social Security Review, 67, 2, pp. 49-65,

Academic Search Premier, EBSCOhost, viewed 13 May 2017.

Haslam, P., Schafer, J., Beaudet, P., 2012. Chapter 3: Theories of Development.

Introduction to International Development, 2nd edition. Oxford: Oxford University

Press.

Hockenos, P., 2013, 'In Greece, 'Academic Hostages' Wait Years for Jobs', Chronicle of

Higher Education, 27 September, Professional Development Collection, EBSCOhost,

viewed 14 May 2017.

Jessop, N., 2012, 'Greece's financial crisis and devastated healthcare system: Greece's

economic crisis has battered the country's healthcare system, resulting in medicine

shortages, market withdrawals and falling profits for the pharma

industry', Pharmaceutical Technology Europe, 4, p. 11, Academic OneFile,

EBSCOhost, viewed 13 May 2017.

Kondilis, E, Giannakopoulos, S, Gavana, M, Lerodiakonou, L, Waitzkin, H, & Benos, A.,

2013, 'Economic Crisis, Restrictive Policies, and the Population's Health and Health

Care: The Greek Case', American Journal of Public Health, 103, 6, pp. 973-979,

Business Source Complete, EBSCOhost, viewed 13 May 2017.

Kougias, K.G., 2014, 'Social Quality Indicators in Times of Crisis: The Case of

Greece', International Journal Of Social Quality, 4, 2, pp. 46-68, Academic Search

Premier, EBSCOhost, viewed 13 May 2017.

Greek Economic Crisis 8

Labrianidis, L, & Vogiatzis, N., 2013, 'The mutually reinforcing relation between

international migration of highly educated labor force and economic crisis: the case of

Greece', Journal of Southeast European & Black Sea Studies, 13, 4, pp. 525-551,

Academic Search Premier, EBSCOhost, viewed 13 May 2017.

Mantalos, P., 2015, ‘Greek Debt Crisis,’ An Introduction to the Economic Effects of

Austerity.

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