The social impact of the crisis on youth unemployed university graduates from Greece and Spain
Who are the victims of the crisis? A comparative European analysis
Master's Thesis 2012 83 Pages
The current financial and economic crisis which has largely afflicted Southern European countries, could be seen a complex system of economic failures which have caused considerable effects in social, political and cultural level. The central dynamics of this crisis focusing on the economic and political governance which have influenced societal and individual functioning of marginalised populations in Greece and Spain, such as youth. This review examines the social impact of the crisis on young unemployed graduates with tertiary education, analysing their views and experiences about the current economic and political upheavals caused in Greece and Spain.
This recession, which is comparable with Great Depression on its extent and duration, has created considerable social problems including increase in joblessness, poverty, and future uncertainty of the young populations. The increasing unemployment levels considering the fragmented labour markets in Greece and Spain have direct implications in psychological well-being and adverse effects for the integration of young people in the society by triggering the danger of social and economic exclusion. The limited job opportunities together with the elimination of the social safety nets accelerate the phenomena of immigration of high-skilled young graduates, inhibiting the development of their national economies.
This paper tries to test the empirical validity of the problems occurred due to the high levels of unemployment on high-skilled youth populations of the two countries, considering the available protective factors. A further examination includes the recent European governance issues emerged alongside with political decisions in national level which have shaped public opinion and formed the views of youth unemployed populations in Southern Europe regarding the causality of the crisis. These political processes have been conceptualised in this research, providing an understanding of the social and cultural values which have defined such actions.
The current financial crisis can rather be characterised as a ‘complex syndrome’ of a systemic fault which is caused by a widely spread of capitalism. Simply the crisis phases are inherent in the logic of the financial system. (Agglietta, 2009) Equally Charles Kindleberger in his book A history of financial crisis, describes that crises are emerging as a result of consecutively phases of the financial system, which are occurred after phases of booms, intense enthusiasm, fear and complete infusion, reformation and finally a new phase of boom. (2005)
An exceptional analysis that followed by Heilbroner in his book Beyond Boom and Crash, who had foreseen the crisis of 1980’s, illustrates that crises are products of capitalism “capitalism has always been as critically ill as it has been intensely alive...(...) “Convulsions” and “revulsions”, as the older political economists called them, “crises”, as Marx identified them, “recessions” and “depressions”, they have been as prominent features of capitalist development as its dizzying succession of technical advances, its enormous material productivity, its irresistible global expansion. So there is nothing new in the fact of crisis. (1978:11)
Even though the characteristics of the different phases of the financial system may differ, their consequences are very similar with those of the past crises and the same paradigmatic as the one of the Great Depression. The similarities of the financial crisis of 2008 and the Great Depression can be seen to its extent, duration and the aftermaths which follow countries to mass devastation, but also caused “discredited unsupervised capitalism” as Samuelson in Washington Post describes. (2009) The Great Depression taught that deregulated markets without government intervention can be proved seriously unstable for capitalism. (Mitchell, 2011)
The range of ideologies embodied around the causes of the current financial crises is hidden in different perspectives about the idealistic world of laise-faire that the proponents of liberal economies support and due to the accumulation of capital to the private sector.(Bonefeld in Macartney,2009) Under the same philosophical framework the turbulence in the financial sector is more a result of financial speculation caused by this overaccumulation, as integral part of neoliberal capitalism.(Hirsch & Wissel, 2011)
The subprime mortgage crisis in the United States is the ‘evil’ creation of investors’ speculation and the banking system, partially caused due to extensive lending to households with junk status, which were previously considered unable to respond to any kind of financial incumbency. While the housing bubble to an extent affected the subprime crisis, (Schiller, 2008) and the assumption of too big to fail financial institutions followed the unsupervised financial system, the global financial crisis had spill-over effects not only to vulnerable European economies but also to the Eurozone and the EU as an economic entity. The ‘bubble’ effect transformed to economic, political and social emergency. The crisis generated waves of political and social instability and has caused high rates of unemployment.
The current crisis was the product of high levels of aggregated risk taken by bankers and financial investors in a free market economy. The economic orthodoxy of that time has transformed a financial crisis to an economic, political and social, increasing the levels of unemployment. The aim of this paper is to investigate the social implications of the crisis in marginalised populations whose voice remains unconsidered by the financial and political strata.
For this reason particular attention will be given to young unemployed university graduates, who experience the crisis as the product of many failures responsible for the uncertainty provided for their future and the psycho-social implications occurred. This dissertation will examine the voices of young graduates from Greece and Spain experiencing the high levels of unemployment combined with uncertainty, the fear of social exclusion, and the indirect effects of immigration. A clear insight will be provided in the experiences of the young unemployed about the crisis as crisis of values and democratic deficit. Due to the continuing upheavals of the day by day facts, this papers will examine the facts happened until the 17th of June when the second national elections held in Greece.
1.2 Motivationfor the study
The motivation to investigated and analyse the social implications of the crisis in youth unemployed university graduates is inspired by multiple discussions followed with young people who were feeling victimized by the political and economic arena and vulnerable to react against the global financial system, facing the consequences of a lost generation. The dissertation is motivated by the experiences and the views of young university graduates who have been influenced by the facts mainly related to the high unemployment levels, although they have invest by means and dreams to their future.
1.3 Structure of the Study
The Chapter Two involves a micro-economic analysis of the causation of the crisis and potential theories related to this as they deployed by the current and previous studies. Referring to the crisis as a matter interrelated with the architecture of the European Union and the economic imbalances but also as a production of dysfunctional national economies. Accordingly, a short description is provided about the impact of the crisis on labour markets.
The Chapter Three contains a documentation of the social implications of the crisis on the populations of Greece and Spain as they have been reported in media coverage but also in recent studies which tackling the problem of social welfare dismantling as the aftermath of the crisis.
In Chapter Four it follows a justification of the methods used in order this research to be named qualitative, the selection process of the sampling according to non-biased methods, and the ethical considerations emerged during the collection of primary and secondary data.
The Chapter Five analyses the impact of the crisis in youth populations directly related to youth unemployment as the most profound effect. It examines how the labour market changes have influenced the difficulty for university graduates to find employment, creating wage desperation and aversion of young graduates to work in their home countries. It is explored the inadequate state support provided to youth populations.
The Chapter Six aims to investigate the social impact of the crisis and unemployment to the university graduates, by exploring the psychological phenomena occurred due to the limited opportunities. Furthermore more personal experiences are explained associated with social exclusion, immigration and decisions based on the current facts. What will also be examined is the incorporated role of the family in serving as protective net and job network for youth unemployed.
The Chapter Seven includes a reference to political, European and global political governance and the level citizens’ trust to the politicians in respect to the crisis. A reference will be made to the causality of the crisis and who is to the blame for it, according to the views of the participants. Furthermore it will be discussed cultural concepts and national and external factors that have contributed to the political dissatisfaction of the citizens but also to the democratic deficit created.
The Chapter Eight includes concluding remarks of the study focusing on the main topic analysed in the text.
CHAPTER 2: THE CRISIS AND ITS CAUSES- A MACROECONOMIC ANALYSIS
2.1 How a globalfiinancial crisis became a Eurozone crisis
The expansion of the crisis from the United States to Europe occurred in a very abruptly way. The global literature has documented many different factors contributed to the crisis, among others turbo-capitalism, deregulatory markets, policy errors, banking lending and technocratic elites, (Wood: 2012) but what was revealed was the many systemic weakness of the European financial institutions (Dabrowski: 2009) and the lack of not only economic but also political integration which has transformed to a democratic deficit. (Klaus: 2012) Despite the different arguments about the crisis which can be contradictory between them, the analysis adopted in this paper is focused on the efforts of the EU to tackle the crisis and to combat market speculation, taking into consideration the social factors.
In one side, the Euro-crisis has mostly affected the countries of periphery characterised by ‘vulnerable’ economies. But also the architecture of the Eurozone itself was built upon economic imbalances of the member-states and it was not well- constructed to prevent such a crisis. When the euro introduced, it was only Luxembourg that met all the criteria, while many counties indulged in ‘creative accounting’ to nominally meet the criteria of insertion into the monetary union. (Martino, 2012) As Vaclav Klaus in one of his speeches said “The undergoing Eurozone debt crisis is an inevitable consequence of one currency, one exchange rate, and one interest rate for countries with very diverse economic parameters.” (2012:5)
Since the creation of the EMU, the ‘artificially’ created Eurozone has three basic weaknesses. In first place, the common Monetary Union consisted by members with major economic imbalances. This proved problematic for the economies of the periphery that were lacking competitiveness. Another very substantial problem was that in the EMU, the monetary policy was officially formed by the ECB but the economic and fiscal policies were remained in the purview of national governments. (Wood: 2012; Hirsch & Wissel: 2011) The Monetary Union limited the capacity of the Eurozone members to have control over their own monetary and economic policies (Lapavitsas et al, 2010). This constituted Eurozone members unable to control their monetary policy in case that a sovereign debt crisis would emerge.
This scenario was not well-predicted by the funders of the Eurozone. When the global financial crisis broke, many European banks and financial institutions were heavily exposed to financial ‘toxic’ assets. The policy responses were chaotic and mainly on national level despite the cross-national effects. Most of the countries were exposed to fiscal deficits but the decisions had to be taken by the national governments due to the limited, almost non-existed fiscal capacity at EU level. (Dabrowski, 2009)
The countries of the Southern periphery which their government revenues had brokedown and had a history of high borrowing levels, during the crisis turned to the markets for more borrowing in order to stabilize their fiscal capacity. (Buiter & Rahbari, 2010; Lapavitsas et al, 2010; Dabrowski, 2009) This boosted their public expenditure (Buiter & Rahbari, 2010; Lapavitsas et al) but also exposed them to the market speculation.
The severe criticism emerged from the fact that until May 2010, the EU did not have a mechanism to deal with a debt crisis and could not possibly have one. (Antoniadis, 2011) The ECB was not allowed to purchase national governments’ bonds neither to intervene to sovereign debts of Eurozone member states because that would weaken the euro currency in the global markets (Martino, 2012). But neither European governments could control their monetary policy in national level. Also ECB did not provide any resistance to the speculation towards the member states. (Lapavitsas et al, 2010) The situation worsened due to the slow rhythm decisions taken in European political level. European solidarity were buried under the interests of elitist and technocratic approaches followed by market speculators and neoliberal thinkers in the European political arena, imposing austerity in countries that their economies presented structural imbalances and high deficits as in the case of southern Europe. (Padilla Casais, 2012) At this point, Germany played a significant role.
As Andrew Moravcsik, professor of Politics and International Affairs, very controversially says “Ten years after adopting a common currency, Europe is still not an optimal currency area. Instead, the single currency exaggerates existing differences and eliminated the policy instruments required to overcome them.
Bankruptcy in southern Europe and prosperity in Germany are two sides of the same coin.” (2012:60)
Another critical judgment is that the emergency measures taken in European level had the form of bailouts and loans involving the interference of IMF (Antoniadis, 2011). The Memorandum of Understanding that countries were conditioning to sign by IMF, imposed to governments and citizens strict structural adjustments which dismantle the social model.
2.2 The sovereign debt crisis in Greece and Spain
The sovereign debt crisis in Europe developed as countries started experiencing high deficits and public debts. (Harrington, 2011) The accumulated sovereign debt in Southern Europe has its roots in two factors. One was the high levels of public spending and extensive borrowing and the other was that the financial crisis deteriorated the public finances of these countries, for reasons already explained. In parallel, the late response of the Eurozone and its insufficiency to provide the stricken countries with the essential tools to fight the markets’ speculation had negatively contributed to the already heavily atmosphere. (The Economist,2009; Lapavitsas et al, 2010)
2.2.1 The Greek Crisis
The Euro-crisis started in Greece in October 2009, when the newly elected government of George Papandreou announced the actual numbers of budget deficit which was 12.7% of GDP rather than of 6.0% as it had been reported by the old government which had manipulated the fiscal figures. (Voigt, 2010; Antoniadis, 2010; Buiter & Rahbari, 2010) Eurostat in its late estimation put Greek government deficit in 13.6% of GDP. Considering that while the sovereign debts of most of the countries deteriorated, Greece entered the crisis with an already large underlying public deficit, (Buiter & Rahbari, 2010) owned to well-known fiscal imbalances and structural weaknesses (Athanassiou, 2009; Antoniadis, 2010; Escribano, 2010).
This created a very unprivileged position for Greece and in spite of the austerity measures that were announced the markets were not impressed, partly due to the country’s poor credibility. The result was that the Greek debt ratings downgraded, the spread of the German debt in secondary markets rapidly increased, and the speculative attacks of the markets obliged the EU and IMF to rescue Greece, (Escribano, 2010; Antoniadis, 2010; Voigt, 2010) even if the response was quite deceiving in scope and timing.
The next round was including a series of ‘rescue packages’ from the EU, ECB and IMF, (referred as troika) which accepted to bailout Greece under the obligation of following austerity measures which are enshrined in two joint agreements know as Memorandums of Understanding (MoU) (Antoniadis, 2010). Both MoU hold of great importance because from an economic aspect outline the challenges that the Greek government faces regarding policy reforms and fiscal adjustments, but at social level have largely been opposed by the Greeks as they mean dismantling of the social welfare leading the country into deep recession and high levels of unemployment.
From a political aspect, the adherence of the two MoU mean that Greece will remain to the Eurozone but will be followed years of great austerity as it has been agreed by the European leaders and the Greek government. At the time that this paper was written Greek people were confronted with the great dilemma of staying or exit the Eurozone, something that would be defined by the results of the most crucial election of the last decades for Greece, the one of the 17th of June. (The Economist, 2012)
2.2.2 Spain on its own run
Spain had a flourished economy before the crisis started. That was a fact of an advanced economy which was mainly based its activities in services and construction sector due to the high aggregate demand for housing. Spanish as the Greeks after the insertion in the Eurozone were enjoying low levels of interest rates which increased their borrowing capacities. (Harrington, 2011) That resulted in indebted households that in case of Spain was primarily due to housing boom and to high levels of lending by smaller or regional banks, known as ‘cajas’. (Harrington, 2011; BBC News, 2012)
Spanish economy started to decline after the global financial crisis manifested itself in September 2008. The housing bubble real estate sector had experience a very dynamic cycle which was reflected in growing prices and the advanced role of construction sector in the economy. (Padilla Casais, 2011) The housing boom in Spain has similar characteristics as in the U.S., driven by liberal bank and mortgage institutions’ lending and high mortgage products, followed by securitization of the markets. (Padilla Casais, 2011; Stratfor, 2009)
When the construction sector collapsed, Spanish government had to confront major problems; the implications from the collapse were tremendous as the levels of unemployment had significantly increased. The government in an attempt to spur economic activity and to create new jobs increased its public expenditure. Additionally, the banking system in Spain paralysed when the housing market crashed, and debtors felt into bankruptcy. The ‘cajas’ were lacking liquidity because of the indebted households and the construction industry which owed billions to the Spanish banking system. (Padilla Casais, 2011; Harrington, 2011; Stratfor, 2009)
The Spanish debt has ballooned and almost doubled since the beginning of the crisis. That has contributed to the downgrade of Spain from ratings agencies, making a start with Standard & Poor’s decision to downgrade Spain in 2009. The Spanish debt continued to rise by reaching the 72.1% of GDP. (MarketWatch, 2012). The latest developments that have been documented when this paper was written, found Spain to have requested a bailout of up to €100 billion from the European Union to recapitalise its banks. (The Economist, 2012)
2.3 How has the crisis affected the labour markets in Europe?
The recession has deteriorated the conditions of labour markets in Europe. The numbers of unemployed rose since the crisis started and decline has been reflected in the hours of the employed population. (OECD, 2010) Some of the profound characteristics of the changes in the labour market are the more ‘neoliberal’ policies introduced is European states. This fact confronts the insecurity and flexibility on labour markets.
According to Eurostat, the decline in employment hit particularly the temporary workers whose contracts are doubtful to be renewed, the young people and the less educated workers who were employed in the construction and automotive industry. (79/2009)Also wages have declined in many countries due to the fiscal discipline imposed to some countries of Europe. In a report published by ILO, is stated that the austerity measures aiming to boost the economies have adversely effects especially in Southern Europe. In fact that has resulted in weaker economic growth, lower investment and more job losses, unfavorably the possibilities for new job creations is limited. (ILO World Report, 2012)
2.3.1 The labour market situation in Greece
In the case of Greece, the impact of the crisis on the labour markets has one of the most negative consequences for the economy and the society. The levels of unemployment have extremely increased reaching 21.7 percent and youth unemployment has grown to 51.2 percent, the highest in Europe. (Eurostat, May 2012)
The structural forms of IMF and the austerity policies have been devastated for the Greek labour markets and have implications for the well-being of the citizens and the social cohesion. According to the statements of the GSEE president Mr.Panagopoulos, the workers’ rights in income have been pushed down as ‘a bottomless pit of Troika demands’ (Lanara, 2011). A short explanation given for the implementation of such measure is that deep wage cuts in Greece and Spain have been seen as the means to increase competitiveness. (Onaran, 2010) A report by Reuters states that the government is expected to pass into force, a law which will impose a reduction of 22% in the minimum wage of €751. More brutal cuts of 32 % will be imposed for youth workers under 25 years old. (2012)
The public sector in Greece has extremely curtailed, and a further reduction has been done in the overall workforce by 150.000 workers, including extension of weekly working hours...(...) introduction of part-time and unpaid leave and transfers of excess employment to a labour reserve.(Hellenic Ministry of Finance) Flexicurity is the new concept introduced in the Greek labour market by the European Union (Business Europe,2011) as the ‘necessary’ method for labour reforms, having a real cost for the working conditions and safety nets of the workers.
As labour market fact, job creation is limited in conditions of deep recession because of the almost non-existed private investment. Greece relies heavily on private consumption accounting for more than 70% of the economic output but people who have lost their jobs or their incomes has been declined by the austerity and are also imposed to pay higher taxes, have lost their consumer confidence. (Malkoutzis, 2011a) The job losses “have a negative impact on confidence, leading to lower spending and investment.” (Tschentscher, 2011:33) The social costs have been disastrous for the Greek society, undermining the safety nets and have been increasing the poverty levels.
2.3.2 The labour market situation in Spain
Spain follows the same ‘austerity’ path as Greece. While Spain tries to save its own economy from stagnation and default, its unemployment rates are increasing with extreme velocity. Spain’s unemployment rates remain the highest among EU-27, with 24.1 percent and the second highest in youth unemployment following Greece, with 51.1%. (Eurostat, May 2012)
Spanish government has also adopted labour market reforms much owned to the collapse of the construction sector where a massive percentage of the population was employed.(Bentolila & Dolado & Jimeno, 2012; Jimeno, 2011; Stratfor,2009) The Spanish labour market is characterised by duality, or better ‘insiders-outsiders’ effects. A more neoliberal approach presented by OECD and IMF, highlights that reforms including the abolition of collective bargaining agreements and reduction of permanent workers could be proved successful in combating unemployment and the high percentages of temporary workers, which was the 30% of the employed population before the crisis. (IMF, 2011; OECD, 2011)
Such labour measures which implemented in Spain led to massive protests in the country. The reforms emphasizing in 5 % decrease in wages for public employees and freeze in 2011, 15% wage cut for government members, raise of retirement age from 65 to 67(Elteto, 2011), tax reductions of the employers, reduction in the redundancy payment to 33 days instead of 45 days per annum, employment modifications with less regulation by the government. (CCGSpain, 2012) Spanish government stated that these reforms have been put into force to boost employment and economic competitiveness but they promote the protection of the employers by giving them more rights in hiring and firing. Further reforms will give to the employers the possibility to make redundancies out of the traditional collective bargaining arrangements. (BBC News, 2012)
CHAPTER 3: THE SOCIAL DIMENSIONS OF THE CRISIS
Previous studies on the past financial crises have been documented that apart from fragility on the financial systems, crises are responsible for disruption on the welfare states, (World Bank,2008) causing major socio-psychological problems on the affected populations. The impacts can be pervasive among individuals and households of all economic statuses, but more severely for the poor and for those who have experienced significant income cuts.
Most of the crises of the previous century such as the Great Depression, the economic collapse of the ex-Soviet Union, and the Asian Crisis have been characterised by social shocks that have caused blows to the social cohesion and social fabric. The current crisis has characteristics of the same size; rising levels of unemployment, income cuts, general insecurity, and public spending cuts in many social services including health provision. (Catalano & Bellows, 2005; Murphy & Athanasou, 2010; Butterworth &Rodgers & Windsor, 2009) Social issues also emerge, connecting unemployment and income decline with mental health problems, increases in suicidal and death levels, poverty and inequality. (Giotakos et al, 2011; World Bank, 2008) 3.1A Greek ‘tragedy ’
According to the previous analyses, the current crisis has afflicted Greek society to a degree that endangers social democracy and transforms an economic turndown to a social. Greece has always been a country lacking the fundamental resources to provide social protection to all layers of population but recently the situation presents a total absence of safety nets. (Bouras & Lykouras, 2011) The strong pressure to recalibrate national welfare states into a more neoliberal fashion has triggered numerous social problems. It is abundantly clear that the ‘memorandum nightmare’ and the strict fiscal austerity eliminated the social cohesion creating an alarming situation.
The official statistics have shown that unemployment is the second highest in Europe, combined with income cuts everyday life has become a matter of survival for many families. The Hellenic Association of Social Workers (ĽKAE) confirms the deterioration in all social indicators where malnutrition, failure of health coverage and access to health services, increased incidents of domestic violence, the rise of mental illness, drug use, the increase in suicides, the dramatic increase in homelessness have become evidence of their everyday practice.(2012)
Poverty levels have been dramatically increased in Greece, since the beginning of the crisis. In the official statistics of Eurostat about the living conditions of European citizens, the level of poverty in Greece was 20% in 2008 whereas in the same report published in 2012 the levels of poverty had been increased in 27, 7% placing in risk almost 3million people. (Eurostat, 2012; Eurostat, 2010)
Matsaganis & Leventi (2011) in their research focused on Spring 2010, found that the poverty rates varied widely, 0% for households whose head workers is employed on public or banking sector to 40% for the households whose head was unemployed or farmer. Considering that the unemployment levels have almost doubled the last two years, poverty must have been increased proportionally.
Similar results have been found in a recent survey conducted in June 2010 by Eurobarometer, for monitoring of the social impact of the crisis in Greece. An overriding majority of the respondents 74%, answered that poverty has strongly increased in their country, 58% answered that their households finding difficulty in responding to their financial commitment and pay bills, 29% responded that they have run out of money to buy food or other essential goods and services whereas 54% reported that they cannot bear the costs of general healthcare for them and their families. In most of the responses Greece had the highest levels of negative responses, very close to those of Romania. (European Commission, 2010)
Considering that Greek society is very much based on solidaristic mechanisms including family networks but also societal efforts to reduce poverty, the case of people being homeless prior to the crisis was extreme. Lately, it has become an overseen phenomenon. In response to published figures from Klimaka and the Red Cross around 20,000 people are living on the streets, both native Greeks and immigrants. (The Guardian, 2011) It has also been an increase of 20% in demand of homeless services (CECONDHAS, 2012), while FEANTSA reports high levels of ‘hidden homelessness’ among young people who due to uncertain economic conditions are unable to secure independent living, therefore live with their families.(2011)
The only service which was providing social housing at low cost to poor workers and vulnerable social groups is OEK. After two years of discussion for the restructuring of the organisation, the new memorandum signed by the Greek government on the 12th of February 2012 removes OEK. The justification given instates OEK as an ‘entity providing social benefits that are not on first priority.’ Moreover, the memorandum establishes that OEK should be closed down within six months after the adoption of new legislation. (CECONDHAS, 2011)
A positive aspect is the creation of social care networks by private initiative, the Church or NGOs, to provide help for vulnerable people and people who lack the financial sources to cover their basic needs in food, housing and healthcare. The number of people asking for this kind of support has been increased. Long queues standing outside the branches of Doctors of the World to be cured or for vaccination, (To Vima, 2012) while other appeal to the Churches which organise common tables for food.
The numbers of common tables (syssitia) organised by the Orthodox Church, has been multiplied due to the increased participation of Greek people. Proportionally, an indication in numbers means that common tables have been increased from 5.000 to 10.000 a day, only in the area of Athens. Accordingly, the number of Greek people participating on them is about 35 to 40%, covering the age groups between 50 to 70 years old. This phenomenon is considerably connected with the rise in unemployment demonstrating that the majority of the people belonging in this age group were close to retirement age but it happened to lose their jobs, and is rather unlike to find another one. (Bouras & Lykouras, 2011)
Health care provision in Greece constitutes devastating. The financial tightening has triggered the problems in the public hospitals whose budget has been reduced by 40%. The lack of financial resources in health care reflected in supply-sided problems, reported shortages of medical supplies, understaffing and dysfunctional clinics. (Stuckler et al, 2011) Panos Papanikolaou, Neurosurgeon at the General Hospital of Nikaia, highlighted a ‘dangerous’ implication of the current situation in Greece; “under official, scientifically proven data, all the countries that received financial ‘support’ by IMF, have shown a drop of 5 to 10years in the life expectancy in some cases.
Another more recent example that has afflicted the Greek society is the lack of medication for the cancer sufferers. The outstanding balance of payment of the public state to the pharmacists and pharmaceutical companies and the collapse of EOPPY  caused disastrous implications for the health of cancer sufferers who have been left without medication and in many cases the only alternative is sufferers to buy themselves the high-costly medicines. (Kathimerini, 2012)
While the collapse of the Public Health system is profound, there is a rise on the number of admissions in the public hospitals. Stuckler et al (2011) indicated an increase of 24% in 2010 compared to 2009, and 8% in 2011 compared to 2010. An outstanding research by Giotakos et al (2011), associated the visits in the hospital with the unemployment rise, and psycho-related diseases with income losses. Significant findings of the same research combine adversely income declines with suicide rates, (Giotakos et al, 2011) whereas Bouras & Lykouras support that the financial desperation, the insecurity, and the lack of employment prospects, leads more people in committing suicides. (2011) According to unofficial data by the Ministry of Health, it has been recorded a 40% rise on suicides, while the national suicide helpline stated that 25% of the callers had financially related issues. (Stuckler et al, 2011; ISSA, 2011)
The financial desperation is also related with increased drug use which according to estimations of the Greek Documentation and Monitoring Centre for Drugs, the prevalence for heroin users rose by 20% in 2009. The overall number given is 24,100 in 2011 comparing to 20,200 in 2009. Relatively, the age group of 30 to 40 years old has presented increases in participation in rehabilitation programmes from 2009 until the examined period which is the first 7 months of 2011. Although many efforts have been done for the rehabilitation of the users, budget cuts in 2009 and 2010 have considerably affected the number of drug users who have access on them. A survey held in the centre of Athens with 275 participants-drug users found that 85% of them were not in rehabilitation programmes. (Stuckler et al, 2011)
Deterioration in finances has also resulted to a rise of crimes rates, violence and homicides. Incidents have been multiplied as indicated by media reports. Violence has also risen, thieves and homicides have been almost doubled from 2007 to 2009.(Stuckler et al, 2011) The official statistics of Hellenic Police, have been presented 0,8% increase in homicides in 2011, while growing tendency have shown the number of robberies from 6.079 in 2010 to 6.636 in 2011 according to the latest available data.
3.2 The social crisis in Spain
Spain, as the country which records the highest levels of unemployment in Europe has followed the path of austerity on its own. The austerity measures are diminishing the living conditions of the Spanish citizens. The social impact of the crisis in Spain approaches similar levels with those in Greece. The cuts made to social spending endanger the protection levels and affecting the social rights. Concerns expressed by UN officials target the inadequate measures adopted by the State to mitigate the negative impact of the crisis, which has been felt by marginalised and vulnerable social groups. The disproportionate harm that these measures occur in specific societal groups has negative consequences and undermines the right to housing, health, education and work. (CESR, 2012)
The crisis has affected all households, but the income declines and job losses is more prevalent on particular societal groups such as single-parents households, young people who live alone and large families. (AntiPOVERTY Mag, 2009) Furthermore, the distinction applies to the different regions in Spain, creating an income gap among the richest and poorest areas in the country. The estimation in 2008 was including 2,434,983 households which were in poverty line. 1,831,017 of them belong to the classification or real poor both in national and regional levels. Extremadura, the poorest region is Spain suffers 32% of unemployment whereas the GDP income per capital in this area is 12,502 lower that in Slovakia or in Czech Republic. (Calvo Gonzales & Cortiñas Vázquez & Sánchez Figueroa, 2012)
The latest figures published by Caritas Spain in the report ‘ Exclusion and Social Development 2012’ show that 22% of Spanish households live under the poverty line with a further 30% facing serious difficulties in making ends at the end of month and nearly 3,3% receives no income at all. (MercoPress, 2012) Statistics of the same report reveal that 34% of the citizens’ budget is being used for mortgage debts, and 7% of the population cannot afford to pay their expenses on time.
Although poverty affects the poorest regions in the country, in Catalonia one of the richest areas of Spain, child poverty is particularly alarming. The Federation for the Care and Education of Children and Adolescents (FEDEA), has confirmed that poverty in Catalonia affects 1 in 4 children. Children have been stricken by the poverty that the crisis caused in the country. Within two years, the number of children living under the poverty threshold has reached 205,000 as it is being confirmed in similar report published by UNICEF.
Indeed the phenomenon of exacerbated social issues caused by financial disturbances is visible in the way that state responds to these problems. The low capacity of the public services to provide the required social assistance has increased the need of nonprofit organisations and NGOs to undertake a more active role in the protection of vulnerable populations in the country. While Caritas has helped 50% more people in 2008 than the years before, representatives of the institution stated that the public social services budget for helping excluded people remained the same as it was in 2007.
The collapse of the construction sector in Spain has also triggered the social problems in the country. The years 2008 to 2011 over 150,000 families have lost their homes or left with high debts.
 GSEE: General Confederation of Greek workers
 Press release on the official website of the Hellenic Association of Social Workers. (1КЛЕ) Publication date 12/06/2012 09:22
 CECONDHAS 2012: Housing Europe's Observatory
 FEANTSA 2011: European Federation of National Organisations working with the Homeless
 OEK: Organismos Ergatikis Katoikias (The Hellenic Workers' Housing Organisation)
 Quoted in the documentary Debtocracy
 EOnnY: National Organisation of Health-care Provision
 Annual report 2011 EKTEnN
 Hellenic Police Press Release 11/03/2012
 This data have been published in 1st of June 2012 on the official website of the Generalität de Catalunya
 From the newspaper article Trampas y miserias del Estado de Bienestar, published in El País, 5 July 2009, cited in Eurofound report Working poor in Europe-Spain.