By Euripides Billis
According to data from the Greek 2009 budget 19 billion euros were granted by the Greek government for pensions and Greek state salaries.
After the reduction of pensions and Greek state salaries for about 55%, 10 billion euros less were granted for this purpose. (until today).
You may see below the result of the above. And as you may see the Greek state gained nothing from the above reduction. Instead it created about 2,000,000 unemployed Greeks
1. From the 10 billion euros of salaries and pensions reduction, an amount of 40% of it, namely 4 billion euros was lost by the Greek state. As this amount would be levied by the Geek state as direct tax (average 20%) and VAT (average 20%)
2. Almost all the remaining per year amount of 6 billion euros( 10 minus of the above 4) would be missing from the Greek market. Which to balance the loss of 6 billion euros had to dismiss corresponding number of employees.
3. Assuming an average annual salary equal to about 9,600 euros (that is to say of about 800 euros per month), then the market had to fire about 625,000 (6 billion euros by 9,600 salary per year = employees.
4. Now after the firing of the 625,000 from private sector, the Greek state and the markets will lose the corresponding amount of their annual salaries. The amount of 6 billion euros (625,000 X 9,600 euros per year = 6 billion).
5. 40% (20% direct tax and 20% VAT) of this amount, namely 2.4 billion euros will be a loss of the Greek state. Which until now has a loss of 4 billion + 2.4 billion = 6.4 billion euros.
6. The remaining amount of 3.6 euros (6 – 2.4 = 3.6) to be balanced by the markets will have as result the fire of 375,000 of employees (3.6 billion euros by 9,600 euros per year of each employee). And the resulting until now fired people equals to 1,000,000 unemployed people (625,000 + 375,000 = 1,000,000 ).
7. After firing of the above 375,000 people an amount of 3.8 billion euros (375,000 by 9,660 per year salary) will be missing from the Greek state and from the Greek market.
40% of that (direct tax and VAT) will be the loss of the Greek state, namely 1.52 billion euros and the total until now loss of the Greek state equals 7.92 billion euros (4 + 2.4 + 1.52 = 7.92).
8. And the corresponding loss of the Greek market to be balanced by firing will be equal to (60% of 3.8) 2.28 billion euros. And the needed number of working people to be fired will be equal to 237,500 (2.28 billion euros by 9,600euros annual salary ). And the total number of fires until now equals (625,000 + 375,000 + 237,500) 1,237,500 unemployed people.
9. The firing of the above 237,500 people will have as consequence the loss 2.28 billion euros of the Greek state and of the Greek market (the before their fire existing annual income of 237,500 people).
10.40% of the above amount of 2.28 billion euros, that is to say 0.912 billion euros will be the loss of the Greek state, which until now has a total loss of 8.832 billion euros (4 + 2.4 + 1.52 + 0.912)
11.The remaining amount of 1.368 billion euros (2.28 – 0.912 = 1.368) will lead to a number of new unemployed people equal to 142,500 (1.368 billion by 9.6 million of each employee). And the until now number of unemployed people equals 1,380,000 (625,000 + 375,000 + 237,500 + 142,500).
12.Consequently then an amount of 1.368 billion euros will be missing from the Greek state and from the Greek market. 40% of this amount, namely 547,200,000 euros will be the loss of the Greek state. With a total until now loss of the Greek state equal to 9.3792 billion euros.
13.And the corresponding loss of the Greek market will be 820,800,000 euros. Which corresponds to 85,500 new fired people. And the total number of the fired people equals until now to 1,465,500 (625,000 + 375.000 + 237,500 + 142,500 + 85,500).
14.The firing of 85,000 working people will give a loss of 820,800,000 euros from the Greek state and from the Greek market.
40% of that amount from the Greek state and 60% of that from the Greek market. So the Greek state will lose 328,320,000 euros and the until now total equals to 9.70752 billion euros
The 60% of 820,800,000 euros loss of the markets, that is to say the amount of 494,480,000 will need the firing of (494,800,00 by 9,600) 51,541 working people. And the total number of unemployed equals about to 1,465,550 (625,000 + 375,000 + 237,500 + 142,500 + 85,500 + 51, 541 ).
15.At last the about 50,000 new unemployed people will give a loss of 820,800,000 euros to the Greek state and to the Greek market. Of which 40%, namely 328,320,000 euros will be the loss of the Greek state. Which will have a total loss of 10.03352 billion euros. An amount greater than the total reduction of the pensions and the salaries of the Greek state.
16.At last the missing too amount from the Greek market of 296,698,000 euros ( 60% of 494,480,000) will give a new number of unemployed equal to the new number of unemployed equal to 31,000(494,480,000 by 9,600) etc. Total about 1,500,000 as the vicious circle continues.
17.If instead of 800 euros per month the average salary of the private sector was less, for example 600 euros per month or 7,200 euros per year the t number of fired unemployed people equals to about 1,714,000.
Ex-Assistant Professor National University of Athens (NTUA)
Note: The message was sent to the German MEP,S of the EU Parliament