A compounding of economic inequality, a reduction in the purchasing power of workers by 40%, and adverse effects on the standard of living of households, the Labor Institute of the General Confederation of Greek Workers (INE/GSEE) notes in the new economic development bulletin, entitled “The cost of living crisis in Hellas”.
Regarding the percentage of the monthly electricity and natural gas bill to the adjusted disposable income of households in the first half of 2022, the analysis notes that Greece had the second-worst performance in the EU in terms of household burden, exceeding 6% of monthly disposable income in purchasing power units.
The wave of high costs in energy and commodities is having a significant impact on the purchasing power of wage earners and their standard of living.
It is pointed out that from April 2022 onwards the loss of purchasing power of the minimum wage in Greece ranges around 19%.
Given that the minimum wage in Greece is below the level of a reasonable standard, it is understood that high costs have diminished the standard of living of wage earners and their families. Living conditions are worse for those partially employed due to the disproportionate impact of high costs on low incomes. An additional negative effect of the decline in purchasing power concerns the dynamics of consumption and growth.
The asymmetric effect of high costs becomes apparent in the analysis showing the loss of purchasing power by income bracket. The combination of rising prices mainly for basic goods such as energy and food and very low incomes is pushing the loss of purchasing power of households with a monthly income of less than €750 by up to 40%.
At the same time, through research, a series of necessary interventions are supported, which aim to protect the purchasing power of employees and the most vulnerable social groups.
According to the GSEE Labor Institute, the great challenge for the current economic policy is to achieve:
a) the de-escalation of inflation,
b) the fair distribution of the cost of inflation and
c) avoiding a recessionary effect on GDP, which in turn would stimulate fiscal risks.
