Gov’t must ensure the strict application of its public sector reforms

Economy and Finance Minister Giorgos Alogoskoufis has promised that 2006 will yield the results of last year’s economic reforms, which will bolster the growth rate and achieve a good measure of fiscal recovery. So, can citizens hope that their living standards will start improving? I believe that the answer to the question is yes, despite the fact that the reforms (uniform shop business hours, the solution to banks’ social insurance problem, the restriction of the licensing of new industries, changes in labor regulations in public utilities and more flexible working hours) were rather limited and did not cover the entire spectrum of the economy, as Alogoskoufis claimed. Nevertheless, the first positive results on economic activity are evident. These include a drop in unemployment, big investments in shopping malls, the rehabilitation of Emporiki Bank and the increase in industrial investment. They are the first signs of a coming spring in the economy, whose growth rate is projected to accelerated this year to 3.8 percent. However, the positive prospects are obviously conditional on ministers strictly applying the new laws and turning a deaf ear to demands by the ruling party machine or the labor union establishment of «jobs for the boys.» For instance, the reforms in the utilities are justifiably considered paramount, and proof of this is provided by the reactions of the union establishment, which did not come to bear because of the opposition of public opinion to any privileged treatment of a few groups of workers. As a survey by business research firm ICAP showed this week, the financial problems of utilities could not get any worse; their deficits have skyrocketed and will be paid by taxpayers to the last euro. The incomes policy for the public utilities which will be announced within days will be a first indication of the government’s resolve to apply the law. Up until now, despite the fact that deficits of utilities grew year by year, their party-appointed managers granted pay raises far in excess of those other public servants received and, naturally, sent the bill to the Finance Ministry. Alogoskoufis said last week that ministers will decide next week on the instructions to the utilities concerning how the new law will be applied. «And the law will be applied, despite some people believing the opposite,» he said. Unfortunately, some of these people are Alogoskoufis’s fellow ministers who wish to preserve their feuds inside the utilities. Another reform which must be consistently applied this year in order to yield results is the law on public/private partnerships for infrastructure projects and the provision of services to the public, such as roads, schools, hospitals and irrigation works. For instance, a private firm will build a school and maintain it, and rent it out to the education authorities. Given the huge requirements of public services, such schemes can produce considerable investment. Therefore, the application of the law, which some interests connected with the Environment and Public Works Ministry are trying to stall, must begin immediately.

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