Thursday, November 04, 2010

Show them the money - Business as usual in run up to Greek local elections

With Greece set to go to the polls on Sunday the pressure on prime minister Giorgos Papandeou to avert electoral disaster for the ruling PASOK party grows ever stronger and so the sudden slew of government promises to the unemployed, mothers and pensioners over the last few weeks. Today brought the promise of 1000 euros for every unemployed Greek in the form of coupons which can spent on training and education. In addition the state run ERT news service reported that mothers  with childen under 18 who have the requisite number of national insurance stamps will be still able to retire early and comes hot on the tail of Athens promise to give retirees an extra 300 euros in December.

Of course, none of this is new and very much marks business as usual as far as election campaigning is concerned. Just as PASOK has promised to fund training through coupons Kostas Karamanlis's New Democracy administration also promised to give every school pupil entering junior high school 450 euros which could be used to buy a computer in the run up to 2009 general elections. However, such campaign pledges have been seen by much of the press and public as an attempt to buy votes by promising one -  off payments in return for support on Sunday.

The coupon scheme in particular smacks of last minute panic and provides a classic example of how the Greek economy got into its present mess. Public money is desperately flung around in order to bolster support for the party in power leading to huge costs and minimal benefit for the country as a whole.

The idea of giving those out of work the chance to upgrade their skills is based on sound logic, at least at first glance but is doomed to failure for a number of reasons which the government is probably well aware of.

1 - First and foremost where is the money going to come from? Even if the EU provides 50% of the funding, with the official unemployment rate at 12% and rising fast this means hundreds of millions will be need to be spent to train the unemployed. Currently, the country is having difficulty raising money to pay basics such as medical supplies to hospitals, back wages to government employees and even heating in schools.

2 - Who is going to provide such training and under what oversight? Much of Greece's private education and training  is subject to few checks and inspections (I worked 20 years in various language schools and never witnessed a single inspection). Given such lax rules the possibility of abuse and fraud is ever present. The reality is that many such institutions only survive through connections with corrupt local officials and politicians who mandate who gets sent where. In such an environment the chances of getting the high quality training most modern economies demand is limited.

3 Lack of training and education is not the cause of the present unemployment crisis.Indeed unemployment is highest amongst the young who have far more qualifications than previous generations. The problem is not lack of skills but lack of businesses that can utilise the massive pool of talent already available.Put bluntly, the economy can only absorb a fraction of the educated youth entering the job market every year.

4 The availability of coupons will push up prices for those who do not qualify and wish to do training courses. The example of the one lap top per student scheme introduced last year by the conservatives is a recent example of how the private sector raised prices of computers to make the most of the coupon scheme implemented. While it allowed students and parents to buy PCs it also pushed up prices meaning that everyone else wanting to buy such equipment paid more.

5 As with the measures promised mothers and pensioners it is a one off measure that does not deal with more fundamental issues such as what is going to happen to the present wave of people made redundant when their unemployment benefits run out in six months time.

The economy is in free fall and with two businesses closing for every one that opens the future for Greece's most vulnerable groups looks bleak with a bankrupt, mismanaged state leaving the poorest to fend for themselves. Likewise the electorate is rapidly losing faith in any political party to offer a way out of the impasse Greece finds itself in and promises of yet more money and funding is convincing ever fewer voters.

1 comment:

Anonymous said...

Guess that these coupons won't be send by mail ;) and that firefighters would burn them.

A safe and good Friday for you.

daily athens