Blowout: a Greek crisis parable

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One of Aunt Cassandra’s few remaining luxuries in life is getting her hair done twice a year in her favourite posh hair salon in the old money enclave of Kolonaki. Fortunately, Uncle Aristos’s prudent financial management left her with enough pocket money to allow her the occasional indulgence. So she nearly required a dose of the smelling salts this time, when she called up for an appointment to be told by an equally perplexed sounding receptionist that the business was closing down.

Gosh, she thought, things must be really bad if such an august institution is forced to close its doors, a real humanitarian crisis for the french polish and blowout set… But as is generally the case, there is more to this tale of financial woe than meets the impeccably kohled eye. After a bit of detective work among her more worldly friends, Aunt Cassandra was able to track down her favourite stylist to his new establishment just a few streets away from the old place (AC does not use mobile telephony, and so had not received the text alert that had informed her cronies on the duplicated client list of this new development).

Sitting in the gleaming white space of the brand new salon, AC was soothed by the parade of familiar faces that greeted her (stylists, colourists, manicurists, waxers, pluckers, threaders and juniors) as she dispensed with the preliminary chatter about how Kolonaki isn’t what it used to be, the list of empty addresses that used to house luxury brand stores, and how no-one who is anyone will be seen dead in Mykonos this summer, now everyone of taste and substance is Airbnb’ing on Patmos. Her stylist, the proud new proprietor with his own name now etched in calligraphy on the frosted glass doors, greeted her like an old friend and made sure she was well looked after (he even managed to get her name right, unprompted).

He didn’t need much prompting to spill the beans. The old salon, he said bluntly, had been sunk by greed and mismanagement. In the bubble years, the founder, by all accounts a charismatic rogue well-loved by the society pages, had plundered the business to fund his “hair-raising” (sic) lifestyle, then taken out bank loans to keep it solvent. At the same time he expanded the already over-leveraged business and spent millions on swanky new premises in premium locations.

The first time the salon went bust was in the credit crunch of 2009, when the banks reined in their lending and the boss couldn’t refinance his loans. The stylist described his predicament paraphrasing in a slightly more earthy way Warren Buffet’s observation that “when the tide goes out you can see who is swimming knickerless (ξεβράκωτος, xevrákotos)”. Undeterred, the boss declared the company bankrupt, moved premises, and reopened under a new company registered in his son’s name (a classic λαμογιά in the modern Greek style). The staff who were already owed several months’ wages were coaxed to stay by the promise that this would be a clean slate, and they would be paid what they were owed if they stayed on.

Things did not improve. It was common knowledge that the staff were owed months of back pay, and the owner was not paying their social security contributions. They still turned up for work, but it was clear to the observant eye that they were not engaged in their work. The business could still have succeeded, the stylist felt: it had a strong brand, a loyal and growing customer base, even in the crisis. But as the wear and tear became evident and customer service deteriorated they were deterred. He hoped that his boss would learn from his past failure, but he was disappointed to see the same mismanagement repeated. He had spent the last year in a state of constant anxiety, dreading the day when he would turn up for work to find the shop shuttered. When (not if) this happened, he would find himself at a mature age (how mature? a lady never asks for fear of impugning the quality of the dye job) having built a career from scratch, having to beg for work as a jobbing hairdresser, worrying whether he would ever accumulate enough pension credits to retire on (a far cry from the quasi-mythical Greek hairdresser of peak crisis reporting, qualifying for early retirement on a full pension).

One day he woke up with his mind made up (“as if I had seen a vision”), he moved heaven and earth and managed to find a way to start his own business. With impeccable (lucky) timing, he made his move as his old boss exited stage left pursued by creditors and tax collectors, more than likely planning his comeback. AC was too discreet to ask how he managed to scrape together the means for the gleaming new premises and equipment. She was nervous enough to notice out of the corner of her eye a nervous looking man in a black puffa jacket pacing the street outside with a mobile phone glued to his ear, and feared that her hard-working stylist had made a deal with the devil. It turned out that the man was waiting for one of the clients, whether as a friend or a security detail was not clear. Still…

Why are we even talking about Aunt Cassandra’s posh hairdresser? Surely there are more important things to worry about at the moment, as another round of austerity measures is about to take effect, and words like “Grexit” and “drachma” make a comeback in anticipation of another summer of discontent.

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“Kolonaki isn’t what it used to be”, November 2015.

It struck me while listening to the story that it was a variation on a theme that one encounters repeatedly while going about one’s daily business in Greece. It is perhaps no exaggeration to think of it as one of the dominant narratives of the ongoing boom and bust cycle; but it is one that is consistently ignored in the reporting, perhaps because it lacks the spurious moral clarity of Greek victim vs. predatory lender, or lazy Greek vs. principled creditor.

Beauty salons, in common with most small businesses in the service sector, have always lent themselves to what are euphemistically termed “informal” employment practices, or the “grey economy” – casual employment, cash-in-hand payment and the associated tax evasion, non-provision of health insurance, pension contributions and other legally mandated employment benefits – as well as being ideal conduits for outright money-laundering. Both before and during the present crisis, Greece has ranked well above the European average in terms of the size of its shadow economy relative to its GDP and the size of its undeclared labour market (although by their nature, quantifying both of these is very problematic). Recent workplace inspections and surveys suggest that the shadow economy is expanding its reach, as employers find themselves squeezed by lower margins and higher contributions (or claim to), but are also able to demand their own terms from increasingly desperate prospective employees. With the highest unemployment rates in Europe at 24.4% (and youth unemployment over twice that at 52.4%), many are searching for a job, but even those that hold one are not much better off in practice. It was recently reported that two out of three private sector employees are owed between two and fifteen months’ back pay.

While AC was being pampered in the comfort of the salon, trade unions marched through central Athens only a block away as part of five days of organised strike action against a pension and tax reform bill. The juniors sweeping up the hair and making coffees were regaling one another with their adventures trying to get to work by taxi from more affordable parts of town (paid for out of their own pockets, natch) because of the public transport strikes. Young, predominantly female, employed by small businesses, they are not represented by any of the strong interest groups in the labour movement and have been some of the earliest and biggest losers of the crisis.

Since 2008, Greece has lost almost one third of its businesses under a variety of circumstances (see reports in Greek and English). These headline statistics likely mask the number that followed the model of the salon’s founder, wiping clean the slate of an indebted business only to re-emerge in another guise. Some are even less subtle about it: a souvlaki shop in our ordinary residential neighbourhood shuttered overnight leaving cutlery on the tables and a delivery van falling apart in the street, and reappeared a few months later under the exact same name and branding only a few bus stops down the road. Further up the food chain, entire media conglomerates have been doing the same. A good portion of these may not have shuttered their businesses out of genuine desperation. Recent figures show that while more than half of outstanding bank loans to businesses or individuals in Greece are in arrears, the Bank of Greece estimates that about 20% of the money in these “red” loans is owed by “strategic defaulters”, i.e. borrowers who have the assets to pay, but choose not to.

Parables are found in the most unexpected places. The posh hairdresser’s tale puts a less stereotypical face on the dry macroeconomic statistics of Greece’s boom and bust years. We don’t yet know how the story will play out: it offers a hint of redemption and new beginnings for those who jump off the merry-go-round, but also a strong indication that some obvious lessons are being systematically ignored in favour of deceptively simpler narratives of villains and victims.

“Are you saying we are a nation of hairdressers?” asks Aunt Cassandra dubiously, her agile mind ready to pounce on a logical flaw with the alacrity of a thrifty widow spying an underpriced designer handbag at a liquidation sale. Not quite. But perhaps we have something to learn from their stories.

This story is mostly true. Names and inconsequential details have been changed to protect the innocent and self-indulgent alike.

For more Aunt Cassandra, click here.

Images: pinterest, Atlantis Host.

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Blowout: a Greek crisis parable

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