A Family Portrait of a Greek Tragedy

After months of rising taxes and budget cuts, the Greek prime minister announced on Friday that the country officially needed an international bailout. The European Union and International Monetary Fund rescue plan is widely expected to require further cuts in public spending and civil service wages and pensions, in addition to changes that would increase labor “flexibility” by weakening rules protecting workers.

But these plans overlook the basic organizing principle of Greek society — the family — and its stultifying influence on the economy.

Welfare programs like unemployment benefits and housing subsidies are already significantly smaller in Greece than in the rest of Europe; Greeks rely instead on government jobs and their families for support. It’s true that Greece’s public sector is expensive, rife with cronyism and in need of reform. But fixing it won’t fix Greece’s problems.

The more pressing issue is that the country’s private sector is comprised mostly of family-owned and family-staffed businesses that hinder competition and innovation and depress wages. In fact, austerity measures will only reinforce the family’s stranglehold on both the state and the market.

Upward of 75 percent of Greek businesses are family-owned. Most are small and rely on family labor, which is as flexible as it gets — in practice, no minimum-wage or maximum-hour laws apply. Women often work for their husbands without salary, and divorce laws don’t effectively ensure the divorcing spouse’s stake in the family business or remuneration for the work she put into it — meaning it’s very difficult to leave a marriage.

Young people are similarly constrained. The lucky ones land government jobs through family connections or work in a family business, “helping out” with no pay while formally unemployed. The unlucky ones toil for meager wages at someone else’s family business, where they have almost no chance of advancing into management. Many live with their parents up to the age of 35 because they can’t afford to live on their own. Unsurprisingly, fertility rates are very low. Young people also depend on their families to supplement their wages and pay the “tips” necessary to get decent health care.

Those who desire independence join the flourishing Greek diasporas in Europe and the United States. I left Greece when I realized that, as an aspiring lawyer with no family connections in the business, I would probably spend the initial years of my legal career serving coffee to someone’s father or son.

Until Greece can find a way to disentangle the private sector from the family and find another way to allocate resources — free from the intergenerational, class and gender inequities of the family unit — no amount of reform will make a difference.

The European Union and the I.M.F. should forget about dismantling Greece’s (already puny) welfare state and increasing labor flexibility in the (already flexible) private sector. The public sector does need restructuring, but the resulting unemployment will only strengthen the dominance of the family. A better solution would be to create a real public safety net that would help free young Greeks from the supportive yet suffocating grip of their families.

This won’t resolve Greece’s financial crisis immediately, of course — nothing can do that — but there’s a generation of young workers languishing in their parents’ living rooms and storerooms who, if freed, could help to turn the Greek economy around

Philomila Tsoukala, an associate professor of law at Georgetown.