ECONOMY

Utility reform imposed on the government, not planned

It is not the first time that an attempt is being made to reform public utilities, with the law passed by Parliament last week. Likewise, it is not the first time that the powerful public sector unions have organized a successful strike in protest. The same had happened in 1996 and 1998. In both cases, the opposition had vociferously denounced the government’s plans. The then opposition is now in government. It seems that, independently of which party governs, the opposition disagrees and denounces and is forced to dare and try its hand at reform only when it comes to power. The two most important reforms being attempted at public utilities are neither the cap put on excessive salaries nor the abolition of collective pay bargaining should unions and employers fail to agree. The important changes are the establishment of a regime of private company law regarding new hirings (i.e. the de facto abolition of lifetime jobs) and the obligatory implementation of International Financial Reporting Standards, which means that utilities’ assets, obligations and capital will be assessed in market prices. This will help provide more truthful financial statements which, in turn, will determine a utility’s credit rating. These developments were overshadowed by the opposition of the chairman of the Federation of Greek Industries (SEV), Odysseas Kyriakopoulos, to the provision abolishing collective bargaining. It was expected of SEV, however, to be one of the defenders of the collective bargaining process, which, after all, is its raison d’ etre. SEV draws its prestige precisely from the fact that it leads other employer unions in collective bargaining with the «social partners,» that is the General Confederation of Greek Labor (GSEE). GSEE itself draws a lot of its power from the powerful utilities unions, since its influence in the private sector is limited. The government was, however, inexplicably surprised that one «social partner» – SEV – chose to support the other instead of coming to its rescue. Previous attempts to reform utilities served merely to prepare them for listing on the Athens Stock Exchange. The listing provided the state with enough revenues to allow it to cut deficits enough to secure Greece’s entry into the eurozone. The current reform is a must for the government if it wants to succeed in its effort toward fiscal adjustment. EU authorities are also imposing tougher conditions in order to provide us with aid and the adoption of IFRS standards by utilities was one. It will not be the first reform dictated rather than adopted by choice.