Greeks turn to black market as economy worsens

ATHENS • During seven years of a grinding economic crisis in Greece, Mr Dimitri Tsamopoulos has lost at least half the clients from his once-bustling tax consultancy. But in the past few months, business has jumped, not because the Greek economy is finally recovering but because it is falling even deeper into the abyss.

With the Greek government pushing through more tax increases to comply with austerity requirements, more than 21,000 self-employed workers and small firms have shut down in the past two months, with many seeking help from accountants like Mr Tsamopoulos to close their books. Yet many are not actually closing their businesses.

"Most of these people will keep working," Mr Tsamopoulos said. "But now, they'll do it on the black market. They're saying they need a way to survive."

Greece is the crisis that never quite goes away for the European Union, and with another tense negotiation with creditors scheduled for this week, the country is struggling to recover from the longest downturn in the euro zone.

The budget-slashing policies and reform medicine required by creditors have done little to revive growth, leaving Greece even more dependent on the three international bailouts the country has received since 2010.

Its shadow economy appears to be growing again as new austerity measures compel once law-abiding Greeks to go off the books. Greece's black market is estimated at 20 to 25 per cent of the gross domestic product, as more people stop reporting their income to avoid paying taxes. As of last month, unpaid taxes in Greece had soared to €95 billion (S$143 billion), up from €76 billion two years ago.

"The heart of the matter for an ever-rising number of citizens and businesses is that they simply do not have the financial resources any more to meet their rising tax obligations," said Mr Jens Bastian, a member of a team of EU specialists that helped supervise Greece's earlier bailouts.

Short on alternatives, he said, "many are falling back into the grey economy".


A version of this article appeared in the print edition of The Straits Times on February 20, 2017, with the headline 'Greeks turn to black market as economy worsens'. Print Edition | Subscribe