Themis Protopsaltou shifted packing boxes across the front room of his parents' flat in Veria, an agricultural town in northern Greece. Aged 31, and married with a two-year-old son, he was reluctantly having to go the way of many crisis-hit Greeks: move back in with mum and dad.

"I've got no choice," he shrugged. "I'm young, I've taken every kind of labour possible since losing my job. But I can't support a family on the occasional pay-cheque of €30 a day. I'm not ashamed. It's not ordinary workers like me who have caused this crisis."

Protopsaltou, who trained in mechanical engineering, once did skilled work in construction, including building work for Lidl supermarkets. Now he sits by the phone waiting for random shift work sorting peaches for a local farm co-operative for €29.45 a day. His wife, who trained in chemical engineering, was so desperate she took a job gutting fish in a market from 6am until 11pm. But even that dried up. Their rent of €250 a month for a cramped apartment had become too much, and they couldn't afford their own place. So Themis's parents – who are in their 60s – agreed to move into a tiny abandoned shop adjoining their flat - after all, empty shops are now two-a-penny in Greece - while Themis renovated their flat for himself, his wife and son. This way, at least there is semblance of privacy. Other families were faced with moving back in with pensioner parents and great-grandparents living in tiny spaces, sometimes a family of five squeezed into one room.

"In Greece the family is everything, thank God, because right now it's all there is," said Themis's wife Maria, lighting a cigarette that she said she could hardly afford but helped her deal with the stress. "The family is the only thing that gives us faith. The government knows families will help each other: in a sense politicians are leaving it up to ageing parents to rescue the younger generations."

Even before the crisis, Greece's social safety net was weak to non-existent and the strong ties of the traditional family filled the gap. For decades successive governments have neglected social structures knowing "mama and papa" would pick up the pieces. Unemployment benefits are small and don't last long, while creche provisions, elderly care and state support are limited.

Greece has one of the strongest traditions of family responsibility in Europe. In rural areas at least, grandparents often look after pre-school children while mothers work, families care for their elderly or disabled at home, parents help around the house and feed the younger generation, sometimes even into middle age.

For Greeks, the most popular means to cope with the stress and anxiety of the financial crisis is to spend time with family and friends – more than in any other EU country, according to a recent report by the Boston Consulting Group.

But the Greek family is now coming under unbearable strain and cracks are beginning to show in society. With pensions slashed, older parents often feel powerless to help their destitute offspring. One person losing a job can have a disastrous knock-on effect on a dependent extended family.

Homelessness is rising, food banks in Athens are struggling to meet demand, and suicide rates have risen sharply along with requests for psychiatric counselling. Young couples can't afford weddings and Greece, already struggling with its lowest birth-rate in decades, now has a generation of 30-somethings postponing having children because they can't afford to feed them. Perks for couples having a third child have been slashed, leaving families worried about making ends meet or paying for the private tuition that increasingly supplements a lacklustre state education system.

Veria, a historic town of around 50,000 people, sits in the centre of northern Greece's rich and fertile fruit-farming region, surrounded by orchards of peach trees. On the shopping street the only premises doing much business is the "everything for one euro" shop. Elsewhere, a broker's sign reads: "We buy gold teeth."

The Protopsaltous consider themselves to be Joe Average. "In fact, we're the lucky ones," Themis said. "I've still got some kind of work." Since construction work dried up last year, Themis has accepted anything from travelling a 140-mile round-trip daily to work on road building, which has now stopped, to carrying carcasses in a meat market.

Veria is the heart of Europe's canned peach industry. Until recently, farm labour had mostly been confined to migrant workers. "Now there are 5,000 Greeks applying for 500 jobs for two to three months of seasonal work," he said. The problem is the last-minute calls for random shifts, never knowing when there will be work or people laid off. He feels increasingly anxious.

"I can't sleep at night, worrying whether what little I do have in the bank is still safe or whether the banks will collapse."

Eight out of nine of the couples they are closest to are in the same situation. But at least the Protopsaltous resisted the steady flow of credit-card offers that landed on their doormat a couple of years ago. Their best friends, a tile-fitter and his wife who doesn't work, borrowed €150,000 to build an apartment. With children of four, six and nine, they are now destitute and can't pay it back. Faced with going to their parents' flat and living five to one room, they have instead taken refuge in a storage space. "It's 50m square and open-plan. The mother and father sleep on a pullout bed, they've tried to build plaster-board partitions but you can hear everything," Maria said.

For a Greek pater familias, this is emotionally hard. "Even for us, there's a loss of all hope, a sense that you're a failure. People feel embarrassed to go back to their parents and admit they haven't succeeded." Maria has long given up looking for a job that suits her qualifications. She has sold bathtubs and worked in a flower nursery. But the spectre hanging over all short-term, quick-fix jobs is that you'll be paid under the counter with no national insurance contributions. "It's a very stressful way of life."

"We're so happy to be able to help Themis by giving him our flat," said his mother Panagiota, 64, sitting in her new living room in the disused shop. "My generation has seen real poverty. But we still worry about how our children will get through this crisis."

Greek personal spending has been transformed. A recent survey found 73% of people had cut non-essential items. Maria hasn't bought new shoes for years. The couple once ran two cars, but now rarely use one. They used to eat at a taverna once or twice a month, now it's once a year. Supermarket trips happen perhaps once a month, and only to discount stores. Pre-prepared food is out, no more takeaway pizzas while watching the football. They make cheap stews that last two to three days. They used to go for coffee three times a week, but at €3 for an iced coffee they now make it at home. They have stopped their occasional weekend breaks to local hot springs. Greek domestic flights have dropped sharply as people cut travel. In one local village, even the periptero – one of the kiosks that are a key fixture of Greek life, selling cigarettes, drinks and snacks – was closing down. Cash-strapped locals were cutting down on cigarettes, no one was spending on chocolate, and definitely not bottled water, with families now refilling from the tap.

Like most families in this northern region, the Protopsaltous depend on food donations from small family farms. Themis's father, a pensioner farmer, brings them fruit, vegetables and eggs. "If not, we couldn't afford eggs for €3 a box," Maria said.

The financial crisis has seen a boom in "back to the soil" movements in Greece, with people growing their own produce. "But if I worry about survival up here, imagine how people must be suffering in Athens with no family close by and no farms," Maria said.

"In Greece, we don't have a social security network, we have friends and family," said Tom Tziros, 47, an unemployed IT project manager in the northern city of Thessaloniki. His German wife worked in a local bookshop but with few able to spend cash on novels, her salary has been cut. The couple was forced to negotiate a cut in their €500 rent. Tziros's father delivers him vegetables from his farm in the region. But his father's pension has been cut and, with new charges for doctors' visits, he can barely afford crucial health checks. Many of his friends in their 30s live with their parents.

"We'd love to have children but how could we feed them? Maybe if we move to Germany we could have kids," Tziros said. "Jobs are being cut, no one is buying anything.

"Money just isn't circulating in this country. The government doesn't care about Greece. If they did, they would have found a proper solution. It's not just about imposing taxes - you have to protect work if you want to tax it."