Greeks thrive on underground market

By , Special to The Christian Science Monitor

For the last five years, the numbers on the Greek economy have been bad and have shown little sign of substantial improvement. Private businessmen, economists, and foreign observers have issued uniformly gloomy forecasts. Some have even predicted that Greece is close to an economic collapse and ready to turn to the International Monetary Fund to pay the country's bills.

Yet in Greece, as in many countries, statistics are misleading. They contain only part of the economic reality.

After two decades of rapid economic growth and improvement in living standards, Greece was jolted in the 1970s by the oil shocks, the worldwide economic crisis, and its own economic mismanagement.

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During the last five years the country has suffered zero or negative growth, a rate of inflation that has fluctuated between 20 and 25 percent a year, growing unemployment, a trade deficit that hovers near $2 billion a year, and a steady decline in real purchasing power.

These statistics do not present an entirely false picture. But the figures do not reflect the impact of a significant segment of the economy that has come to be known as the ''underground'' or ''parallel'' economy. This sector accounts for between 8 and 25 percent of economic activity, according to various sources.

The underground economy is generally credited for the abundance of foreign ''luxury'' goods, such as late-model cars, motorcyles, and fashions on the streets Athens, even in relatively poor neighborhoods. On the legal market these goods would import duties sometimes as high as one to two times the value of the good in the country of origin. There are few signs of unemployment here, although the jobless rate is said to be near 10 percent.

''To live beyond your means is a national characteristic,'' explains an Athenian businessman, ''but that's only a minor reason. You see, most make far more money than they declare, and many of the alleged unemployed have only lost their declared jobs. Many are underemployed rather than unemployed.''

Many Greeks hold down two or three jobs, but only one official position. If they lose that job, they are classified as unemployed.

A business might have more employees than it declares, thus avoiding social security taxes and higher wages. The worker in return pays no taxes and usually gets social security coverage from another job. Some Athenians say it is not uncommon to declare lower wages than are actually paid, which saves money in taxes for employers and employees. Landlords often offer concessions on terms in exchange for a lease that lists a lower rent than is actually being paid. Shops and small factories often stay open later than allowed or declared as long as this can be done discreetly.

Boat builders who construct the traditional double-prowed, wooden fishing boats often ''help'' one another and are not paid for this. Business transactions are done in cash and under-the-table work is virtually impossible to control. Even some doctors are paid in unrecorded cash.

Economists and private bankers estimate that the amount of undeclared foreign currency not deposited in banks is in the tens of millions of dollars.

Whether or not the underground economy represents a real problem is a matter for debate. For the government, it means employment statistics are inaccurate. This complicates economic planning and denies the government revenues that must be made up through indirect, regressive taxes such as levies on gasoline and cigarettes. But the activity goes on in the open and no Greek government is likely to make an issue of it.

And one Athenian says, ''This is a country of small businesses. Each one, with all its tricks and maneuvers is part of what is often the freest, most dynamic, tax-free sector of the economy. In good times it's there. In bad times it's there. It's our best safety net.

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