Greece takes sweeping measures to avert economic collapse due to pandemic

When Prime Minister Kyriakos Mitsotakis in a nationally televised address yesterday stated that the aftermath of the Coronavirus pandemic may be “nightmarish” and that “there will be victims” one may well assume that one of them will be the Greek economy which was already struggling to recover from a decade-long depression.

In the crucial battleground of public health the government will spend 200mn euros beyond funding in the 2020 budget and Finance Minister Christos Staikouras said he will deny no health ministry request. He projected a growth rate of slightly above zero percent, although have been projections of a shrinking of the Greek economy.

Layoffs as of today will be null and void

The most important measure for labour is theoretically the across-the-board ban on layoffs, but that of course is little consolation for workers at the tens of thousands of businesses that are expected to shut down.

If businesses that will re-open violate this measure they will not be eligible for the benefits that apply to businesses that were shut by state decree.

Balancing needs of business, labour

The aim is to strike a delicate balance between the rights and needs of both labour and business within the extremely tight fiscal framework that is the legacy of Greece’s bailout memorandums.

There will be EU relief on various levels and most importantly the suspension of the 3.5 percent primary surplus target which Greece had agreed upon with creditors long before the pandemic.

Employees of businesses the activity of which was suspended by the state will receive a one-off 800-euro stipend.

Suspension of insurance contributions, expansion of flexible labour

As long as businesses remain closed employers will not pay insurance contributions and there will be a three- month extension on payment of businesses’ February contributions.

Flexible labour relations that were previously limited will be allowed in order to facilitate the continued operation of businesses.

Ten days that shook Greece: ‘horrifying’ number of layoffs

Though he did not offer numbers Labour Minister Yannis Vroutsis told Mega television today that the data on the state’s ERGANI labour tracking system for the first 15 days of March are “horrifying”.

There have been 30,000 layoffs since the government ordered the suspension of activity of a large variety of businesses such as cafes and bars.

“We should all be a little patient – both businesses and the state,” Vroutsis said in a plea for businesses not to close definitively.

A prospective Greek tourism tragedy

For Greece the most devastating blow may be a prospective implosion of the tourism sector which is considered the engine of the economy, but no targeted measures to avert a disaster have been announced as yet beyond those taken for businesses across the board.

Tourism accounts for a whopping 31 percent of Greece’s GDP (15.6bn euro in revenues from 30.1mn visitors in 2018) and 26 percent of the labour force the same year(988,000).

Sweeping measures to bolster business, labour

In a joint news conference today Finance Minister Christos Staikouras, Labour Minister Yannis Vroutsis, and Development Minister Adonis Georgiadis today announced a package of sweeping measures to shore up struggling businesses as well as workers and employees.

Finance Minister Christos Staikouras told Mega television that the measures in the 2 billion euros will be extended on a monthly basis is necessary if necessary and will be supplemented by other measures of a total of 1.8 billion Euros through actions from EU funds.

For particular categories of severely affected businesses their tax obligations will be suspended.

The VAT tax will be slashed from 24 percent to six percent on pharmaceutical products used to prevent the spread of the virus such as surgical masks and ant-septic products, for which there has been a far greater demand than supply over the last weeks. There has been extensive price gouging on these products.

A break for freelancers, self-employed

There will also be a four-month suspension of payment of March taxes on freelance professionals who work in sectors affected by the pandemic.

Rent slashed for closed businesses, their employees

March and April rent will be slashed by 40 percent for all businesses the activities of which have been suspended by state decree and for individuals working at such businesses – but only when the home is their primary residence. It is unclear if property owners will receive compensation.

In a measure that will reliever all property owners the ENFIA real estate tax will be the same as they paid last year and will not be calculated on the basis of the recent rise on property tax valuations.