ECONOMY

Immigrants and jobs

It may sound far-fetched, but two key public issues – on one hand, the large number of temporary (but long-term) contract workers in the public sector, and, on the other, the influx of immigrants in Greece – are related in some ways and have common explanations. The unacceptable practice of having temporary contracts renewed for many years, time after time, originated in the late 1980s, when the government at the time found this to be a useful way of both meeting fiscal constraints and supporting its drive to staff an expanding public sector mostly with political clients – at a lower cost. The number of immigrant workers grew noticeably along with the growing division in society between private and public sectors, and it coincided with an acceleration of job losses in the farm sector. It also took place at a time when the underground economy grew ever more robust, the official economy was fast absorbing the bonanza of EU investment subsidies and private consumption was growing strong on the back of economic stabilization and the conversion of drachmas into euros. The part of the population not born in Greece is now estimated at more than 10 percent. Most of them earn a living on the underground labor market, but the number of those with work permits is rising. And so the country has achieved an employment level much higher than that which appears on the official statistics – in any case, much nearer to the European average. The more foreign workers settle here, the more Greeks aspire – and ultimately manage – to find a job in the public sector. Bureaucracy is growing at a fast rate and is ever more protective of those serving it, while the private sector labor market is becoming ever more competitive. EU and national funding of a better social protection network are feeding a huge mass of privileged employees in the public sector. The overprotected labor market has three tiers: the public sector, the private sector and the «hidden» sector. If the influx of immigrants was absorbed without any particular problems, this is due to two main reasons: First, improved prices and incomes in the farm sector (largely through EU subsidies), which nevertheless were apparently not good enough to stem the exodus to the public sector and to private sector service industries. The mass presence of immigrants in the farm sector explains why salaries in the urban centers were not adversely affected and which, combined with public sector employment, prevented a surge in unemployment. Second, the strong growth of the construction sector, whose share of added value to the gross domestic product grew from 6 percent to 7.5 percent in the second half of the last decade. In this case, the supply of immigrant workers functioned competitively to Greek workers and dampened wages. Friction between private and public sector employees seems unavoidable as conditions in the two sectors diverge. Comparisons regarding work hours, pressure and job (in)security are already part of daily conversation. If the labor union movement remains a prisoner of statism and its one-sided political orientation, if market deregulation affects (as expected) the private sector more, and if hopes for jobs in the public sector are trimmed, the cleavage is bound to deepen.