When I first went to Greece several years ago I bought like many visitors a guide book. There was in that guidebook a picture of a group of Greek men at a table in a cafe idling away the time and playing back gammon and drinking coffee. I imagine that image or similar appeared in several guide books and is responsible for the image that most northern European’s now have of the Greeks, that is a people who spent hours idling their time away gossiping.
There are many erroneous stories circulating in the press about work shy Greeks, but I intend just to focus on one, that is the pensions story. This one unlike many others appears to have an element of truth.One the reasons the International Monetary Fund (IMF) has given for pulling out of the current negotiations is that the Greeks extend further financial support to Greece is their refusal to reduce the size of their pension bill. At present the pension bill accounts for 10% of GDP, while the average for European member states is 2%. It seems from this that the Greeks are molly coddling their pensioners by paying than far more than other states pay. However this ignores two key facts and the first is that the austerity measures imposed on Greece have reduced the size of the economy by 25% which means if the economy shrinks and the pension bill remains the same, it will become a proportionately greater share of the GDP. If this is taken into account in pre austerity Greece the pension bill would have been about 6.5% of GDP, a figure not too different from that of the UK and Germany. Also this 2% average is a figure much reduced by the minimal pensions paid in many of the new Eastern European states. These states pay minimal pensions or none to their retired and this drags down the European average. It does seem that the EU and its member states want to push Greek pensioners not poverty through reducing their pensions to a nearer the Bulgarian average . Any astute observer would have noticed that reports in the newspapers that pensions in Greece had been reduced so much in response to the demands of the EU that most represented more than the lowest of living wages.
What the EU seems to doing is using Greece as a template for a Europe that is fit for bankers and big corporations but unfit for people. This is not to deny that there is much that is wrong with the Greek economy, but that the wrong problems are identified and the solutions that are imposed to solve the problem are the wrong ones because they are addressing the wrong problems. The austerity programme can be best explained by the use of metaphor, the programme has wrecked a badly built but functioning house and left it its place nothing but some waste land.
In Praise of the Greeks
What economists particularly those in government employ forget is one of the first lessons they learnt, which s that wealth is anything that is valued by people. Economists much prefer wealth that can be measured in monetary terms and don’t factor into account in their calculations, wealth that lacks monetary values, yet this wealth can regarded as equally valuable by its receipts. If out of work time was not valued, people would want to work as many hours as possible. Instead much to the frustration of employers they want time at home with family or friends or just leisure time to enjoy. In consequence there has been a move in northern Europe to increase the economic cost of out of time work to high as possible, so as to discourage workers from taking it. This has been achieved by reducing wages (particularly in Britain) so employees are forced to work for many more hours to earn a living wage. Employers have persuaded successive governments to weaken all the protections that workers formerly enjoyed at work. This means that workers with insecure employment, who are in fear of losing their jobs are much more willing to sacrifice their out of work time to meet the employers demands. Workers for instance on zero hours contracts in Britain risk not getting work ,if they refuse their employers request to come into work, no matter how unreasonable the request. Greece represents a throw back to the time when workers had rights, the right to refuse to adopt modern flexible working practices.
It looks to the politicians of Northern Europe and the USA that Greek society as a whole is conspiring to prevent the obvious and much needed structural reforms, most especially in the labour market. Labour flexibility means in simple terms that workers are at the disposal of their employers, who can use them in what to the most efficient ways, unrestricted by trade unions, politicians or culture. This can mean as in Britain that a split shift system is employed, so staff are only called in at busy times, times such as early morning or evening when the family needs the working parent most. Therefore in a low productivity society such as Greece it was obvious that it would incur debt problems, as it was paying its workers too much for too little work. Greece needed to be carried kicking and screaming into the modern age. Once Greece had adopted the reforms so desired by the Northern Europeans it’s newly productive workforce would produce the surplus goods for export which would reduce the deficit.
Part of the same story was that as the Greeks were paying themselves too much and as the local economy did not produce enough to satisfy their demand, they turned to buying goods from abroad. This obviously created a trade deficit, and the solution to the problems of debt addicted Greeks was to cut their incomes. Incomes were reduced by cutting average wages, reducing pensions and welfare payment and finally the cruelest measure reducing people’s income to poverty levels through unemployment. This shock treatment was deemed essential to reduce the deficit.
There goes unremarked another story, that a large part of Greece’s debt problems had little to do with Greeks over paying themselves or doing too little work. German and other European banks had huge surpluses of cash and rather than invest those funds in industry with it’s relatively long pay back time, they wanted an alternative that generated quick returns. Only speculative investments in property and other assets can earn the big returns, so the German banks in particular made huge speculative investments in the Greek property market . When the financial bubble burst in 2008/9 these banks had potentially lost millions of euros in foolish property investments. They were saved by the European Central Bank who lent millions of Euros to the Greek government to bail out is stricken banks, who were holding millions of euros of worthless investments. Then through a clever sleight of hand these debts were no longer those of the banks but those of the government, as the European money was given to the banks to bail them out, but it now counted as a government debt. This made it much easier to portray the Greek problem as that of feckless Greeks and not foolish German bankers.
While it is hard to argue that the austerity imposed on Greece which has caused national income to fall by 25% and increased youth unemployment to 50% has been a success. What matters is how this story is portrayed, which is that if you give the workers too many rights and privileges they will abuse them and the economy will lapse into chaos. This is why it matters that British newspapers print nonsensical stories about young women marrying old men so as to earn an entitlement to a lifetime income. There are many similar stories in the British media about the feckless Greeks, which have convinced the British that the problems of Greece are all its own fault. Greece is a useful horror story to be used by employers and governments when workers claim addition rights and protection against abusive employers. They can claim that when workers get too many right they abuse them and the result is national bankruptcy. If workers are given few rights and protections they must understand it is in their own interest and they won’t use them responsibly. In Britain all three major parties accept this mantra and when the last government restricted workers access to employment tribunals on the grounds that all these needless appeals against dismissal were costing the employers millions of pounds, this change was understood as necessary by all three main political parties.
Why a paean of praise for the Greeks, a country with one of the worst performing economies in Europe even before the financial crash? One reason they put a higher valuation on non monetary wealth, workers did retire early but this was symptomatic of a country that valued its people above its output. The patronage system did lead to abuses such as over employment, when too many party loyalists were employed in public sector jobs. Yet for whatever its faults it valued its people, compared to their British counterparts they had security of employment and could look forward to a well paid retirement.
Human society is not a perfectible creation, whatever the society there are always problems. What I am stating is that Greek society for all its faults found one of the answers to the problems that society faces. It was a society that attained a more equitable division between non monetary or material wealth and material wealth. Greeks because of the unique nature of their society were able to enjoy a much higher standard of non material wealth than their Northern European counterparts. It is perhaps no coincidence that Greece as with the southern European nations family relationships flourish they are the nations of the extended family. Only in the Anglo-Saxon country such as the USA could somebody write a book called “Bowling Alone” a book about the loneliness of contemporary life. In Britain the nation of overwork and underpay family breakup is at record levels, with some estimate suggesting that under current trends 1 in 2 marriages will end in divorce. Countries such as the USA and Britain that put little value on non monetary or non work wealth have some of the most serious problems of social disharmony.