[FR] In Greece, a health success before another economic collapse?

Greece began lifting lockdown restrictions on 4 May after six weeks of coronavirus-induced lethargy. The death toll from the epidemic – 173 – is very low for a country with a population of 10.8 million. But economic activity has been stifled, particularly tourism, which accounts for a quarter of GDP. How can Greece’s remarkable health exception be explained? Will the economy be able to recover quickly and prevent a drastic rise in unemployment? What are the risks for the executive, which is banking on Greece’s success in dealing with Covid to attract tourists this summer and to draw new grounds for national pride that will unite the country politically?

On 20 May 2020, in a televised address, Greek Prime Minister Kyriakos Mitsotakis (New Democracy, right) made a point of reassuring the population. ‘We will win the economic battle just as we won the health battle,’ he promised. The ‘battle for health’ refers to the coronavirus. Greece has managed this epidemic better than most other European countries, with only 173 deaths from Covid-19 among its 10.8 million inhabitants as of 26 May. These good results enabled Greece to begin a gradual lifting of lockdown restrictions on 4 May, ahead of several other European Union countries where the virus continues to rage. But on the economic front in particular, concerns are coming to the fore. In what state will the country emerge from this lockdown and how can it cope? This question is now on everyone’s mind in a country that has just endured a decade of austerity and is experiencing a weak recovery based mainly on tourism. Tourism is now the sector most affected by the coronavirus and lockdown.

To understand this paradox between relief on the health front and economic concern, we must first understand how Greece has responded to the coronavirus epidemic. The primary reason why Greece is faring better is its lesser involvement in globalisation at this time of year. Giorgos Panayiotakopoulos, Professor of Epidemiology at the University of Athens and Vice-President of the National Public Health Organisation (EODY), explains: ‘Greece has far fewer air connections than Belgium, which is at the heart of the European Union, France or even Italy. As a result, the epidemic wave started later and was less severe than in other European countries.’ Indeed, the first case was detected on 26 February in Thessaloniki, Greece’s second largest city, in the north of the country. Then, a few days later, two other cases were discovered in Kastoria, a town in the north-west specialising in furriery. These three people had taken part in Milan Fashion Week. On 12 March, the first death from Covid was recorded; it was a man who had travelled to the Holy Land with a group of pilgrims at the end of February. Around 50 of them had fallen ill on their return.

When the epidemic arrived, ‘Greece had already been able to observe closely what was happening in Italy,’ the specialist continues. The Italian tragedy led to a real awareness among the Greek population of the dangers and devastation caused by the epidemic. In addition, the EODY recommended very early on that the government implement ‘social distancing’.

This measure was applied at its first level in early March with a ban on gatherings, including the country’s traditionally well-attended carnivals. The measures then became increasingly stringent. From 12 March onwards, everything accelerated. Schools, universities, nurseries, theatres and entertainment venues were closed, and two days later, cafés, restaurants and taverns, archaeological sites, museums and libraries suffered the same fate. On 15 March, tests were administered to all travellers arriving from abroad and they were placed in quarantine for two weeks. On 17 March, the country’s refugee camps were placed under lockdown. On 21 March, travel by boat to the islands was restricted to permanent residents. From 18 March onwards, religious services were banned, even though the Orthodox religion plays a central role in this country, where there is no separation between Church and State. Finally, on 23 March, a general lockdown was put in place, with all travel requiring justification; air links were significantly reduced. Another important measure was the isolation of ‘clusters’ or ‘nests of contamination’. Various villages were placed in isolation after cases of coronavirus were detected there; Civil protection officers delivered food to the doors of each house so that residents did not have to go out. Finally, Greece has few elderly people in nursing homes. There has been no contamination in these establishments.

‘The government listened to the recommendations of scientists,’ says the EODY official. The lockdown, at each stage, even took place in a spirit of national unity. According to various sources, Alexis Tsipras, the leader of the opposition (Syriza, left) and former Prime Minister, contacted his successor Kyriakos Mitsotakis and assured him that he would support the lockdown if the decision was taken. Even the Easter holidays, which are a time for celebration, family gatherings and travel, were spent at home. In short, the lockdown is being widely respected by the population as a whole.

But did the government, the opposition and the population really have any choice but to follow the experts’ recommendations and stay at home? In terms of health, Greece has a number of risk factors. Firstly, in medical terms, Greece has the second oldest population in the European Union, with 22% of inhabitants over the age of 65. According to the OECD, overweight or even obesity, considered a risk factor for the pandemic, affects 55% of the population, which is above the European average. Secondly, the healthcare system is in poor shape after ten years of budgetary austerity. On 28 April, the NGO Amnesty International even published a report showing that, as a result of severe budget cuts since 2010, many people can no longer afford or access healthcare. Healthcare professionals have explained that they are having to cope with severe staff shortages, a crisis situation that the arrival of COVID-19 has only exacerbated. According to the OECD, healthcare spending fell from €23.2 billion in 2009 to €14.5 billion in 2017. The number of hospital beds per 1,000 inhabitants fell from 4.9 in 2009 to 4.2 (compared to 8 in Germany); in February, hospitals had only 550 intensive care beds available. Since 2009, 18,000 doctors have left the country. In the event of a problem, the medical transport system does not have its own medical helicopters. Medical evacuations by air are carried out through a partnership with the army, structured around four airport bases, while many of its islands are veritable medical deserts. The arrival on an island of a virus that spreads rapidly would probably have caused a disaster. Finally, Athens and Attica are home to 3.8 million inhabitants, more than a third of the country’s 10.8 million population. However, Professor Panayiotakopoulos points out that Covid is an ‘urban disease’ that spreads particularly easily on public transport and in crowded areas. In fact, the majority of deaths have occurred in the Athens region. In this context, ‘we all knew that if the epidemic spread, we would not have the capacity to deal with it,’ says Professor Panayiotakopoulos.

This fragile healthcare system, with public hospitals that are clearly under-equipped and understaffed, is in fact the main factor that led to the general lockdown. It would not have been able to withstand the pandemic. In its report, Amnesty International calls on the government to strengthen the healthcare sector and make it accessible to all. But this is not the path chosen by Kyriakos Mitsotakis. Under the government of Antonis Samaras (New Democracy) between 2013 and 2015, he was Minister of Administrative Reform and implemented budget cuts, privatisations and reductions in the number of civil servants, which particularly affected hospitals. Now Prime Minister, he has had to develop urgent solutions to tackle the epidemic. But the opposition sees the choices made as a means of strengthening private structures and accelerating the privatisation of the health sector. For example, the recruitment of 3,748 health workers was announced, but only 400 were actually hired in April in public institutions. Of the 450 new intensive care beds created, 250 were allocated to private clinics, using public funds. Another point that has attracted criticism is the amount of compensation granted to private clinics for the use of intensive care beds. Until now, according to an agreement signed under the previous government between the state and the clinics, this amounted to €800 per day; it has now been doubled. The fear is that public hospitals will remain the poor relation of the healthcare system at a time when unemployment and precariousness are likely to increase again. Years of austerity have already led to a deterioration in the healthcare system.

The figures on this subject are staggering. According to Eurostat, in 2009, 27.6% of the population was at risk of poverty and social exclusion; this rose to 36% in 2014 and still affected 31.8% of the population in 2018. Unemployment affected just under 10% of the population in 2009. It peaked at 27.5% in 2013. In 2019, it stood at 17.3% of the population. In February 2020, according to the Greek Statistical Office (Elstat), the country had approximately 746,000 unemployed and 3.9 million people in employment. However, according to sources at the Ministry of Labour, between mid-February and mid-March, 42,000 jobs were lost.

In response to the situation, in mid-March the government decided to take measures to support employment and SMEs. These include reducing rents for shopkeepers, deferring bank loans and tax payments, suspending collective agreements, and providing an allowance of €800 for employees who have been furloughed due to the virus. The opposition is sceptical about these measures, to say the least. The €800 allowance for 45 days is equivalent to a salary of €533 per month, which is less than the minimum wage of €650. In addition, companies can now employ employees for only two weeks per month, for a maximum of nine months, paying them half their salary, without any unemployment benefits to compensate for the loss. For the time being, these measures have prevented an explosion of unemployment.

However, they raise two concerns: the first relates to the precariousness of work following the introduction of the possibility of employing employees for only two weeks per month; the second concerns the de facto reduction in wages. According to various forecasts, the country will have at least 160,000 more unemployed people by the end of the year. This estimate is based on a forecast recession of 10%, but some economists believe it could be even greater, in the order of 3% per month. The country is once again at risk of entering a spiral of ‘recession and falling consumption’.

In this context, the government is counting on a recovery in tourism this summer. This sector is vital to the national economy. It has contributed significantly to the growth that the country has enjoyed since 2016. According to the Greek Tourism Federation (SETE), this sector generated 47 billion in revenue in 2018 (38 billion in 2016), equivalent to 25.7% of GDP. 400,000 employees work directly in the hotel and restaurant industry. In total, 20% of the country’s 3.9 million employees work in tourism. Although vital, it is nevertheless the sector most affected by the lockdown. As a result, the season has not yet begun. Usually, from mid-April to the end of June, hoteliers welcome conferences and speakers in addition to ‘off-season’ tourists. This year, everything has been cancelled. Worse still, tourism booking calendars are struggling to fill up. Seasonal workers, who usually start work between May and June, have of course not been recruited. Various hoteliers estimate that they will be operating with half or even two-thirds fewer staff. At the same time, Evgenios Vasilikos, secretary general of the Association of Hoteliers of Athens, Attica and the Argo-Saronic Islands (EXAAA), points out that “half of hoteliers fear bankruptcy. We were emerging from ten years of crisis and starting to make profits again. It’s as if someone were pushing our heads back under water, even deeper and more brutally than before.” In this context, he deplores three major shortcomings: a lack of information on the aid that the government will provide to businesses, a lack of prospects for the aftermath of the Covid crisis, and a lack of details on the nationalities of tourists who will actually be able to come to Greece.

The slow recovery of the country’s main sector of activity therefore raises questions about Greece’s dependence on other countries. In the 1970s, tourism was mainly domestic or by Greek nationals. It began to change in the 1980s with the construction of small hotels. Then, in the 1990s, the type of tourism changed, and mass tourism developed in the country. ‘But the major problem is that the development of this tourism has not been accompanied by a development of domestic production, including to support demand from the tourism sector,’ explains Savas Robolis, professor emeritus of economics at Panteion University in Athens.

Tourism professionals are aware of this problem and the challenges it poses. As Evgenios Vasilikos, Secretary General of EXAAA, points out, ‘the problem is to ensure that other types of industries and other economic sectors increase their share of GDP without reducing the profits generated by tourism.’ ‘ For him, this means thinking about ’changing tourism and developing green tourism.‘ But for now, the main concern remains ensuring the recovery of tourism while protecting the health of both employees and tourists. Greece is therefore banking on the ’good image” it gained during the epidemic and the low number of deaths from the pandemic to attract visitors.

This strategy is also evident in the words chosen by Kyriakos Mitsotakis when he speaks to the international media. On 4 May, on CNN, the Greek Prime Minister said: “We hope that the worst is behind us. What I take away from this crisis is a sense of collective achievement. And I dare to use the word pride. The Greeks have not felt this proud in a long time.‘ Uniting around this ’national pride‘ is therefore the political challenge of the moment, especially since, as he indicates in the interview, ’this summer will be very different from previous ones.”

After this health crisis, the Prime Minister knows that his economic and social actions are being closely watched and that the first statistics are likely to affect the confidence he currently enjoys. Initially, the population seems to have welcomed the government’s actions. In early April, the Skai television channel published a poll showing that 82% of Greeks surveyed had a positive opinion of the Prime Minister’s actions during the pandemic. On 19 May, the Parapolitika website published a poll showing that 40% of Greeks were in favour of the government, with only 20.3% supporting Syriza, the main opposition party.

But protests are beginning to emerge on various fronts. The opposition, NGOs and many citizens are concerned, for example, about an environmental law passed on the sly on 5 May. Under the guise of speeding up the process of awarding environmental certifications, it opens the door to massive exploitation of hydrocarbon sources to the detriment of Natura 2000 reserves, which aim to protect the diversity of fauna and flora in remarkable areas, and to the detriment of archaeological heritage. University students and teachers are concerned about the conditions under which exams are being held. Artists, who do not have the same intermittent status as in France, are at risk of not being able to work before the end of the year. They are protesting regularly and denouncing the lack of government support.

How, then, will the executive branch emerge from this ordeal, which has been going on since March? The conditions allowed it to quickly take measures that prevented hospitals from becoming overwhelmed, saved lives and preserved national unity. That unity is now beginning to crumble. The fundamental question once again revolves around the tourist season. According to the minister in charge of the issue, Greece could welcome only ten million visitors instead of the 33 million expected. If they do come, even in greater numbers, the damage will be limited and the government will be reinforced in its strategy and communication. By flattering ‘national pride’, it can win the favour of a worried population.

But for how long? Many observers, such as Professor Savas Robolis, are asking: “What will happen when the first effects of the recession are felt and tourism is in free fall? ‘ Part of the population is once again talking about the ’memorandum”, the loan agreements signed between Greece and its creditors between 2010 and 2015 in exchange for reforms. Will Greece then return to wage and pension cuts and public spending cuts? To do so, the executive has a comfortable majority in the Vouli, the Greek Parliament, where the New Democracy group holds 158 of the 300 seats. But in order to implement these kinds of policies, which go against its campaign promises, it will need the support of the population. It is possible that rallying support is the fundamental aim of the government’s leitmotif of ‘national pride’ in its speeches, in order to gain acceptance for a programme that would break with its economic promises and its success in the fight against Covid.