As financial crisis drags on, Greeks see a bleak future

ATHENS -- The walls and floors are spotless and all the tools are in their places. It has the feel of an operating room rather than a car repair shop, except for the noise from birds in their cages and the news on TV. Inside, a sign hangs: "All work must be paid for in full upon completion."

"I bought this a few years ago," said owner Giorgos Katsikadakos, 56. "I just wanted to help the old man selling them. Back then the sign seemed funny but now, it's so real: People ask me now to pay in installments."

Amid the chaos, Greek leaders dumped longtime leader George Papandreou for Lucas Papademos, an economist who vowed to shepherd a series of rescue measures such as tax hikes and benefits cuts to address the country's massive debt and ailing economy. On Thursday, talks continued between Greece and its private creditors over a deal to allow the country to receive a $170 billion bailout from European Union nations.

"The exit from the crisis won't be easy," Papademos told the parliament during a recent budget vote. "The budget has difficult and ambitious goals."

Greece has suffered from a deep recession that has lasted two years. Its debt is massive, increased even more by a spending spree with AAA-rated euros it obtained after ditching its own low-value drachma 10 years ago when it joined the eurozone. But while southern Europe was borrowing and spending, Germany and other northern European countries were making money from the rise in exports to countries such as Greece, Italy and Spain.

Unable to pay off its loans, Greece has been forced to slash its spending and public benefits, raise taxes and rely on bailouts from the wealthier EU nations. Though its new prime minister says the country has a pathway to recovery, Greeks say they aren't hopeful about a change in their lives anytime soon.

Higher taxes, high unemployment and little economic growth added to reductions in services and pensions that have been part of the attempted solution to Greece's financial ills have forced people to the brink who have never been there. Greeks have been taking to the streets to protest the changes. The government this week said that 1,580 demonstrations had been held in Athens this year.

"After 34 years of work, I can't get a pension; I need at least four more years of work," Katsikadakos said. "Plus, I have to pay 450 euros every month to the state for health insurance and social security, just because I own a company, even when I have zero income."

About 183,000 businesses will shut down by summer, according to a new study from the General Confederation of Professional Craftsmen. The study expects that 100,000 of those will close in the next month or two, leaving hundreds of thousands of people jobless.

One out of four small- and medium-size-business owners say it's possible they'll declare bankruptcy in the next year, according to a recent state survey. If true, it would mean 320,000 lost jobs.

Maria Katsikadakou, 60, Katsikadakos' wife, who came by to see if her husband wanted lunch, is equally glum.

"We're still open because we own the store," she said. "Business owners that had to pay rent for their stores were forced to close."

Growth is stagnant

Timos Melissaris, an economist and a self-employed private investor, says the problem is that the public sector grew so large, it is now squeezing the private sector.

"Even in Economics 101 you don't teach this kind of tax raid. Instead of catching the tax evaders or taxing the top executives and their bonuses, they continue imposing more taxes on the middle and lower classes," Melissaris says.

Until recently, one in three workers in Greece were employed by the state. In an effort to minimize the public sector, the government announced that it will put to labor reserve about 30,000 employees, who will later be laid off after two years.

Two years of continuous austerity measures have led to deadlock. Rising anger has turned national holidays and even evening walks into protests against Greek politicians. Members of the parliament seen in public have had Greek yogurt thrown at them as a form of protest. "Of course the Greek people are responsible for the situation," said Evi Andreou, a 39-year-old waitress. "We're responsible for voting in such corrupt politicians."

Taxes to pay for the public sector and an expensive pension system have been high. Three new taxes have been added since 2009: a self-employment tax of 300 to 500 euros, a solidarity tax of about 1% to 5% of one's income and a real estate tax.

Tax avoidance is also high among business owners, and the state is doing little to catch the evaders. But the combined prescription of lowering salaries, pensions and benefits and raising taxes as demanded by the EU, the IMF and the European Central Bank in return for bailout money is stagnating growth.

"My boss doesn't pay my commissions anymore. He said he can't afford it," said Zeta Papadopoulou, 30, a photographer who had to move in with her boyfriend because she couldn't afford her one-bedroom apartment anymore. "So, I just get the minimum wage. That's not enough to get by in Athens."

At Varvakios, the central fish market in Athens, sales are down more than half the norm, said Adonis Economou, 42, as he heaped ice onto the day's catch.

"Even our regular clients are affected," he says. "Instead of buying the red porgy as usual, they now prefer cheaper fish."

Bloated public sector

Those who work in the bloated Greek public sector say conditions are not better there for employees.

Alexia Stamidi, a sixth-grade teacher, said the classrooms are without supplies even though she teaches in the upscale Athens neighborhood of Marousi.

"In September, I didn't have chalk ," she said. "The schools don't have money. We can only pay with credit, so the suppliers don't want to do business with the schools."

This year the state did not distribute free books to the students like it had every year, so teachers had to work with photocopies. Positions also went unfilled longer than usual.

"We feel mocked when we're told to teach with modern methods like projectors and computers," Stamidi said. "There's one projector for 15 classes, and the school's computers have no access to the Internet. The technician won't come to fix the problem since he doesn't know when he's going to get paid."

Greeks stay home

Tourism, a longtime pillar of the Greek economy, is one of the few sectors thriving. This year the number of tourists visiting Greece has increased by almost 10%, according to the Association of Greek Tourism Enterprises. But those working in the industry feel the crunch anyway.

"In the past, tourists that came to Athens would also visit two to three different islands," said travel agent Dania Papadoniou, 57. "Now, they might just go to Santorini, which is eight hours back and forth, for just a day. Tourists don't spend as much money anymore."

Though tourists might be arriving in greater numbers, there are fewer Greeks traveling abroad.

"In the past, we organized groups leaving for trade shows in Germany," she said. "Every year, we had 10 to 12 groups with 200 people. This year we only had two people going."

In the past year, unemployment skyrocketed from an already high 12.6% in 2010 to 17.5%.

Kiki Tsartsabalidi, 30, has a bachelor's degree in electrical engineering and a master's in mechatronics, which is a combination of engineering disciplines. She had been working for seven years until two years ago.

After losing her job as a professor's assistant at the Technological Educational Institute of Western Macedonia, she moved back to Athens to live with her parents and shares a bedroom with her younger sister.

"It's the first time I'm unemployed," she said. "Employers prefer people with just a bachelor's degree because they can pay them less. But I'm not an exception. There's a tragic story like this in every family."

Her father, a 55-year-old contractor, recently got laid off. Tsartsabalidi's mother and sister are also unemployed and the family lives off of her father's unemployment benefits and severance pay and the few euros he makes on odd jobs.

"Now, he might work some days a month for a friend, as a construction worker," she said. "Next week, I'll go help my dad throw away some debris."

The situation is worse for younger people. The unemployment rate for Greeks ages 18 to 35 is close to 40%. And people such as Tsartsabalidi say they don't believe things will change for them.

"I'm 30. By now, I should have my own home and my own family," she said, sitting in her father's two-bedroom apartment. "Instead, I live with my parents and don't believe I'm ever going to have a family. All my friends are in the same situation. "

It's not just the lower end of the income scale being affected. Athens pathologist Constantinos Papatheodorou says he usually had a full waiting room until this year.

"People don't come to the doctor as much anymore," Papatheodorou said. "They go to the pharmacist first and only if they don't get better, they'll come to the doctor."

Analysts say Greeks are not exaggerating their plight, which is one big reason Greek political leaders have been reluctant to impose the spending cuts demanded by the European Union.

"For such people, the problem doesn't appear to be going away any time soon, and unemployment will continue to rise," Melissaris said. "Nationwide unemployment might even reach 20% next year."

That doesn't surprise Alexandros Katsikadakos, 28, an unemployed information technology professional. "How has the crisis been for me? Until now somewhat painlessly," he said. "I'm not influenced from the payment reductions directly since I don't have a paycheck! Yes, we joke about it, because otherwise we'll go crazy."