ECONOMY

Rehabilitating the economy means an end to job privileges

It is not the first time that the issues of social insurance and labor rights in the broader public sector have risen to prominence in the news. The late prime minister Andreas Papandreou had denounced the demands of the «top flight» workers, which were later effectively dampened through court orders. The serious problem of banks’ unfunded pension liabilities is a product of that old regime, which established privileges and practices that can no longer be sustained. Part of this same regime are the workers at Hellenic Petroleum, whose bonuses amount to an extra 5.7 monthly salaries a year and who also have privileged leave status. The flip side of the same coin tells us that the losses of the Hellenic Railways Organization last year were four times its turnover. Athens’s newly built tramline and suburban railway have shown similar financial performances due to their lack of passenger traffic. Planning in the broader public sector often bears little relation to efficiency, while the various departments and utilities have excess numbers of staff. Dealing with the problem is not easy, as a large part of the country’s income is produced in the public sector and a sudden reduction would have serious economic as well as political impact. In actual fact, if the staff at public companies was somehow miraculously restricted to the absolutely necessary levels, there would be an explosion in unemployment and consumption would subside. Current efforts to rehabilitate sections of the economy where the state still holds extensive interests, as in OTE Telecom or the banking sector, are based on the gradual approach. It will help the specific enterprises but not the problem of inefficiency at large. Besides, in most cases, reductions in the number of employees are made through early retirement schemes, which worsens the ratio of those who pay contributions to those who receive pension payments. The prospects for imbalance of this ratio are indeed awesome with the increasingly aging population. The end of the privileged pension funds is inevitable. Such trends have wider repercussions in the functioning of the economy which society is not mature enough to face. And a society that is not mature enough to appreciate the evaluation of universities by some objective criteria is bound to deny many other things. Many unionists, for instance, appear ready to subscribe to the claim that any attempt at establishing flexibility in work hours, although likely to lead to an increase in employment, would amount to «medieval labor relations.» Logically, they should be prepared to argue that workers in the US, the UK and other countries where such flexible working hours exist are really slaves living in unbelievable misery, and that their higher per capita income is just an illusion. In all, the problem is old but the ways that governments used to get round it have now become ineffective. They cannot devalue the currency in order to bolster employment, even at the cost of fueling inflation. They have to improve the competitiveness of the economy with true rehabilitation measures.