February 11, 2015
By Àngela Corbalán, Oxfam’s Head of EU Communications and Deputy Head of EU Office
When the election results were finally announced in Greece on Sunday, they were just a formality.
Exit polls confirmed what most had suspected long before votes began fluttering into the ballot boxes – that Syriza would sweep into power in Athens on a firm anti-austerity ticket. Greece’s rejection of austerity policies may raise eyebrows across Europe, but it should not come as a surprise.
Civil society has been warning about the possibility of a continental ‘lost decade’ for several years, with Oxfam predicting that damaging austerity policies could force up to 25 million Europeans into poverty by 2025. Such a slide towards destitution has already occurred in Greece, and elsewhere, including Spain and Portugal.
As of the end of last year, one in four Greeks were unemployed, rising to over 60 per cent of under 25s. This unemployment, coupled with cuts to public services, plunged many in Greece into dire straits. Public debt stands at 175 per cent of GDP, with the Mediterranean nation experiencing a worse period of growth than the US during the Great Depression in the 1930s. Meanwhile, investment in the Greek healthcare system dropped dramatically due to austerity policies, leaving one in three Greeks without medical insurance due to long term unemployment.
The implications of Syriza’s election may concern Greece’s creditors, but such a strong public call against austerity is understandable when the decimation inflicted upon Greek society is taken into account.
Growing extreme economic inequality across the globe is highlighted in Oxfam’s latest report, Wealth: Having It All and Wanting More, as is the detrimental effect this is having on attempts to combat poverty. Today the 80 richest people on the planet have the same wealth as the poorest half.
The level of inequality rose in Greece after austerity policies were implemented, as it did in other countries cutting back on public spending, resulting in the poor getting poorer or the rich getting richer – and in some cases both.
The good news is that inequality is not inevitable and alternatives to austerity exist. Decision-makers should promote a new economic and social model that invests in people, strengthens democracy and pursues fair taxation.
Ensuring that workers are paid a living wage to cover basic needs like food, housing and clothing, while providing this workforce with safety nets, is crucial to stave off the negative effects austerity could force onto societies across Europe. The effects of austerity in Greece saw wages there drop by an alarming ten per cent between 2012 and 2013, further adding to the country’s poverty epidemic.
But money raised from an efficient tax system in Greece could have avoided cuts to healthcare and education budgets and provided the ‘virtual income’ that many poor people benefit from through access to public services.
Tax evasion and avoidance by large companies and wealthy individuals costs Europe at least €120 billion in lost tax revenue every year, not to mention the billions siphoned away from developing economies in desperate need of revenue to finance their own progress. In Greece, the amount of tax dodged may have reached almost a third of GDP between 1999 and 2007 – the biggest informal economy of any EU country.
But why is tackling inequality so important to fighting poverty? Well, when economic and political power is only in the hands of the few, the needs of the rest of society fall by the wayside. This is the message Greece delivered to the European Union on Sunday, and it’s a message that must be heeded by European governments and institutions alike.
After this firm rejection of the economic status quo, there is only one course of action the EU can take. For starters, European Commission President Juncker must begin to shift Europe’s focus away from detrimental austerity measures and propose tangible initiatives to clamp down on tax dodging by individuals and companies – for the benefit of both Europeans and people the world over.
This article was originally published in New Europe.Oxfam International EU Advocacy