One of the serious issues looming ahead of us and will spur the need for deep adjustments and reforms, is the issue of changes in the traditional Greek model of family cohesion. In fact, the phenomenon has already been detected but is still in a semi-dormant state, but it will appear much more intense in the coming years.
In the average typical Greek family, for many decades, the degree of cohesion and dependence between successive generations of its members was very high. This cohesion and dependence had both social and economic characteristics.
The family supported children during the education cycle, which on average exceeded the nominal period of the academic programs. It then helped the children with income until they became part of a professional normality, often providing the family home for their temporary residence for a long time or contributing to the payment of rent. Later it participated with a high percentage or even offered all the resources for the purchase of permanent residence, it helped in the upbringing of the children, that is, it was also socially and economically active for several years in the life of the next generation.
In the successive cycle, the younger generation, once on their feet, responded to the elderly parents and served many of their health and daily care needs that increased with age. Offspring often helped financially, in many cases “hosted” one or both parents within their home. In other words, they were generally there for the shorter or longer duration of parents’ old age, and felt and performed their “debt” to their parents.
A cycle that normally ended at the end of the life of the parents who usually bequeathed to their children all their property – mainly real estate. The rule was that this property was usually free from encumbrances and liabilities, which was an increase in the net worth of the next generation.
These long successive cycles of roles in the average family, under normal circumstances, also meant the continuous increase of family wealth, in terms of net worth, from the previous to the next generation. Until the advent of the economic crisis in the country almost a decade ago, this was the general rule for the average and traditional Greek family.
From the above description alone one can see, I believe, how many changes have occurred in recent years. The parents’ generation was affected by the crisis, their incomes were curtailed or significantly reduced, whether from work or from pensions. For many, this deterioration was both abrupt and profound and irreversible.
Resources for child support have shrunk. Properties were also hit. The general decline in liquidity in the economy has left its mark on real estate, which for many was a source of additional income. The increase in taxes on income and property, combined with the decrease in income, made many people give up and “consume from what they had accumulated, with the result that the classic old age cushion was reduced. The endurance for aiding ones offspring also decreased.
At the same time, youth unemployment and the general work crisis have left them with little or no income and dependence on the already financially wounded family has increased. Many sought refuge abroad, more were forced to find low-paying or temporary jobs, uncertainty increased. The creation of new families was postponed until couples were older which necessarily meant fewer children. Caring for parents became more difficult in social and economic terms.
Many fortunes gained burdens, loans created difficulties or incapacities for service, and the passing of wealth to the next generation from an advantage often became a struggle, as evidenced by the increasing number of renunciations of inheritance. Real estate was sold – often in a state of emergency – to address serious liquidity and currency needs, at a time when the banking system could not respond to new financing.
All these changes, and many others less obvious, have changed the social and economic geography of the average traditional Greek family. For a section of the population, their consequences have already been felt, while in sections of society with higher endurance they will be seen gradually in the coming years. The estimated economic growth in the country is sure to help, but even with restrictions on the intensity, the classic and traditional social and economic model of the typical Greek family has now entered a new phase and is showing new characteristics.
This is not necessarily a bad development.
The model is changing, like everything in our lives in recent years, and new balances are being sought. The family is, as everywhere, the smallest pocket of society, family ties and family standards affect how an entire society stands, behaves, and organizes. If, for example, practical care for older parents cannot be provided within the family, there must be appropriate, adequate, accessible, and effective structures to replace or complement it. Or if older parents cannot play the role of caretaker for grandchildren, access to appropriate daycare services should be easy and free.
These issues necessitate immediate changes in the work model, which should enhance work from home and create more time for child care, parental leave for both parents as well as special arrangements for single-parent families. The list of similar social changes is long.
But also in terms of financial dimensions, the changes are extremely important. The generation of today’s young people up to the age of 40, the generation of Millennials and generation Z, are the first post-war generations that in terms of creating new wealth of their own are expected to lag behind the generation of their parents. This means that these same generations will inherit and be called upon to utilize wealth comparatively greater than that which they themselves will create.
This phenomenon upsets a lot in the formulation of fiscal and financial policy, which must also be adjusted to the new balances in order to support all the services of the state to citizens. Demographic developments also have their significance. The general population is already declining and the projections are showing an acceleration in this decline, the older population is growing as well as the dependency rates of retirees on active citizens, average longevity is being extended by advances in medicine, biology and biotechnology.
It is therefore clear that in the coming years, significant cuts must occur in public finances, which also affect private finances. Their depth will depend on the formation of revenues and their distribution, on the expansion of the tax base, on tackling tax evasion and of course on the level of public expenditure. Both the Pissaridis report and the design of Greece 2.0 identify the sustainable convergence of average income with European averages as a key objective.
In addition to Greece 2.0, which opens an investment horizon of 58 billion euros within a 5-year period, the Government’s reform initiatives are evolving along the logic of a consistent fiscal policy. Among them are the de-escalation of corporate tax rates, the reduction of non-wage labor costs, the incentive of attracting tax residents from abroad, the reception of digital nomads who generate new wealth and form new revenue bases, the repatriation of the brain drain that will usually be achieved through higher incomes than the domestic average, changes in labor laws that flexibly accommodate global trends, changes in pension funding starting with the new supplementary insurance of young people who will accumulate their contributions instead of paying them towards their parents’ pensions, digital capabilities to simplify and expedite real estate transactions and more.
They all seem to be moving to deal with changes that are either underway or predicted quickly, especially after the pandemic, and are therefore in the right direction. The policy changes that are being incorporated and will have a greater impact on the younger generations, given the fact that everything is changing in the typical model of the Greek family and therefore inductively in society, will give a battle mainly with the time and speed with which they will be implemented. the reforms.
Ultimately this are the stakes and the wager, exactly. Changes happen and will happen, this can not be influenced because they are almost legislative and it is utopia to believe that in terms of globalization, we will enjoy their positive aspects and will be invulnerable to those that are a discomfort. What can and must be done to win the country’s wager, is the changes to “tie-in” with appropriate and timely reforms. In Greece of the extremely great opportunity of a cycle of great growth from the European funds of resilience and recovery, two words will be key: Speed and reform.
Minos Moysis is a founding partner of the consulting company, SYNERGON Partners