Thursday, June 23, 2011

Why does Greece find its so hard to cut its public sector?

Greek general strike 2010 - Thessalonik

This is the question that many foreign analysts and especially those in the north of Europe keep asking. Surely, in times of economic difficults the number of state employees should be reduced in order to help the country balance its books? The slowness with which Athens has implemented such cuts has been put down to the variously to sloth, fecklessness of the ruling socialist PASOK party and the supposed love affair Greeks have with civil service jobs.

As with most complicated economic systems the reality doesn't easily fit either into national stereotypes nor grand economic theories. To understand the reliance of the Greek state sector one has to look more closely at its role in the social, political and economic life of the country. For years the only real jobs in Greece were those in the civil service, by "real", I mean in the way most people in the developing world understand employment in the modern sense with regular pay and benefits, standardised entrance procedures and the chance of a career.

For the rest of the population the choices were either submit to whims of Greece's noriously exploitative private sector job market or be self employed. Weak private sector trade unions, the lack of legal protection, constant threat of being fired plus chronically low wages meant that for most Greeks the only way out of poverty and up the social ladder was a place in the civil service or a business of your own.

Greek trade unions organise general strike and marches nationwide

The Greek state, almost from its inception has used the promise of stable employment and reasonably high salaries to ensure loyalty for those in power and co-opt those individuals and groups who threatened the status quo. As with many authoritarian regimes public sector employment also brought with it a wide range of other benefits such as preferential treatment by orgnaisations such as banks and higher social standing in general.

When the Regime of the Colonels fell in 1974 and parliamentary democracy was restored to Greece the Left which had long been hounded and surpressed by the State was for the first time able to appeal to voters for their support openly and no longer would voters on the left be penalised or blacklisted in applications for state positions. With the rise to power of  the socialist PASOK party in 1981 headed by Andreas Papandreou, (father of present PM Giorgos Papandreou) the parameters of the Greek state were expanded so as to widen access to education, health care and other benefits so making PASOK wildly popular for a generation as it opened opportunities previously undreamt of for many lower income Greeks. In doing so Papandreou also took advantage of a burgeoning state sector to continue the time honoured practice of all Greek rulers of rewarding supporters with postions on the public pay roll..

However, while new rulers could add new positions and sinecures to the state pay roll getting rid of older employees was always a problem as the public sector developed powerful trade unions aligned with exisiting political parties whose job it was to protect their members interests when administrations changed. Cut back too deeply on existing jobs and pay would trigger an angry response in the form of strikes and loss of possible  backing for the union's party of choice.

However, in contrast to trade union movements in other countries the Greek unions realised that any show or weakness or compromise would invite disaster for their members when dealing with a new government all too eager to get rid of opposition within the state apparatus and reward followers with positions left vacant.

As a result you have a public sector which is built fom the ground up over decades to resist cuts in both jobs and pay and its perhaps a telling indication of the power of Papandreou, who owes his position as PASOK party leader in large part to his links with trade unions that strike action has been muted, at least compared with the 80's and 90's. Yet, the promise by Athens to privatise large swathes of the public sector combined with deep pay cuts has put that deal in jeopardy as rank and file members grow impatient with the lack of concrete action on the part of their leadership.

Few, if any Greeks have any illusions about how badly run their public sector is, they daily have to deal with its infuriating lack of responsiveness to public needs and pay huge amounts to deal with its deficiencies. So, their opposition over cuts in public spending is not based on a rosy view of the past but the hard earned, often bitter experience that if they public sector is cut back they will be thrown upon the none too gentle  mercies of the private sector which will happily replace public monopolies with their own more expensive private ones in which only those with enough money will be able to afford the kind of health care, pesnions and education that most people took for granted.


The Cheshire Cat said...

Excellent point - the fear of awful conditions in the private sector increases the their resolve stay secure in the public sector. (large section of the pop have been, or are children, of refugees - the state offers them a sense of permanence)

Also on today's BBC world program:

We now know that Greek statistics are so unreliable. But the press are so willing use unreliable Greek statistic when it finds it convenient.

E.g working hours declared are never the number of hours that one may actually work because of employer fiddles, private and public workers fired and rehired annually etc etc.
A slow legal expensive legal system means the peoples' right that exist in paper do not exist in reality.

This hides the truth in the same way that Greek government hid the truth about the debt.

So we have, on the one hand, false statistics being used to show that Greeks are cheating and on the other false statistic to show that they are lazy.

Hence the only people who are lazy are the people lazy enough to use such statistics.

Also I wonder If I can sue the BBC for racism - as the Greek are now employees of the ECB/IMF

Anonymous said...

Economic analysis fail, ασε ρε γίγαντα τις αριστερές οικονομικές αναλύσεις το 99% απο αυτά που λες είναι πίπες...