On the road to recovery

The historic deal between unions and management at state telecom OTE and the speech by Prime Minister Costas Karamanlis at the Greek Industries Federation (SEV) hints at a great improvement for the Greek economy. Of course, you will not find this upward swing in any indices yet. Public revenues remain insufficient and illustrate the crisis in the market, industrial production remains at the lowest levels of the last four years, and lack of liquidity is forcing construction companies to sack staff. Yet the change in the atmosphere has been evident from last week, based on the positive response of the stock market and the raised expectations across the country’s business spectrum. Businesspeople will be the first to record the swing with their investments and staff hiring. Entrepreneurs began showing optimism in April, according to Eurobarometer. After the recent OTE deal and the clear commitment by Karamanlis to take on the well-entrenched state bureaucracy, they are certain that a new era may really be dawning for our economy. The people may respond this optimism too, since the restructuring of the economy will benefit everyone. In citizens’ minds, the premier’s determination is linked to the country’s economic cycle. Economy and Finance Minister Giorgos Alogoskoufis is undoubtedly right in telling SEV that the OTE deal abolishing the permanent status for newly hired employees proves that there can be consensus in economy, although everyone in the know acknowledges the deal was struck in the last minute. The agreement came when the prime minister ordered Alogoskoufis to submit a bill in Parliament on Tuesday changing workers’ status at OTE. It’s true that this display of the government’s determination has accelerated the good news. This story will be repeated in the next phase of changes the government plans for the next three months. These changes include tackling the banks’ social security problem, labor legislation, the selling of Olympic Airways, and the new generation of privatization efforts. After 15 months of waiting, social dialogue has been exhausted. It has proved fruitful in OTE’s case, but fruitless in the case of the banks. Karamanlis is ready for the challenge without abandoning policy, and he always seeks consensus before moving on to cases where mild and measured clashes with state company unions are deemed necessary. The prime minister reached that decision after a long meeting last week with the ministers. It was agreed that the biggest wounds in the Greek economy – debt, inefficient public administration, low competitiveness, deficits and corruption at state companies, unemployment and high costs – cannot be healed without structural changes, painful for some. Karamanlis stressed that the government’s mild adjustment policy and the patient talks with unions highlighted the importance and seriousness of changes required for social security and labor issues. He said the government has already won over a broad majority of the public, and this has allowed him to take on union interests. The PM’s phrase that «the party and the government did not come into power just to manage but to uproot established mentalities» is indicative of the new policy being formed. Karamanlis himself believes these clashes will be critical, since many unionists are prepared to compromise with the government and because solving these problems will have such a positive impact that public opinion will be convinced that rifts may actually help the economy. Alogoskoufis told Karamanlis that his plan for the banks’ social security problem, if unions insist on their negative stance, provides for the creation of an auxiliary fund for Emporiki and Agricultural Bank’s employees, which will stay open for their colleagues from other banks to come in later. Dealing with the problem in such a way will trigger a positive chain reaction. First, all banks will be sanitized and produce positive results, according to the international financial reporting standards (IFRS), which will strengthen them and help the investment initiatives they are planning. Then the last part of the social security problem will be solved, offering security to employees. The privatization of Emporiki and Agricultural will proceed and the atmosphere in the stock market will improve, allowing the government to continue with its privatizations under better conditions. The fate of the economy begins with the government’s determination to change the way things are done.