It’s no use trying to stop the rollercoaster of globalization

Since 2000, the European corporate sector has entered a painful phase of restructuring in order to face the intensifying competition that globalization brings. In the United States, this cycle began a few years earlier and is still continuing. Restructuring could be described as the sum of initiatives aimed at reducing the production costs of goods and services so that an enterprise may win new market shares and increase its profitability. Such initiatives may include: first, mergers and buyouts of similar enterprises that achieve economies of scale; second, drastic cuts in expenses in sectors that underperform, with a parallel shift of resources to segments that perform well; and third, big modernization investment programs. Unfortunately, a common denominator of all such initiatives is staff reductions, as evidenced daily. In Greece, this wave of restructuring arrived, as expected, with a delay, because markets are not yet liberalized and state intervention remains strong. Very few Greek enterprises are implementing restructuring programs, and those are are mainly in banking. Eurobank and Alpha Bank absorbed Ergasias and Ionian respectively a few years ago, while National and Emporiki made bold moves and closed down loss-making subsidiaries more recently. In industry, the non-competitive concerns either prolonged their life by migrating to neighboring Balkan countries, where labor costs are much lower, or began closing down. But this rather stagnant picture began changing recently: Philip Morris announced the building of a brand-new cigarette factory for its subsidiary Papastratos, Coca-Cola said it would close down one plant and transfer its production to another that can be expanded, and the government announced the closing of a fertilizer plant in Thessaloniki. These moves, to a lesser or greater degree, carry with them the ugly specter of layoffs. Unions are now strongly pressing the goverment to stop the layoffs and voluntary retirement schemes which Papastratos and Coca-Cola are promoting and for the fertilizer factory to reopen. They are backed by prominent members of the main opposition PASOK party who visited the Thessaloniki factory and assured workers that PASOK will work for its reopening when it returns to power. Now, it just so happens that one of those prominent opposition members, former EU commissioner Anna Diamantopoulou, had seen the closure of another fertilizer factory – indeed in her own electoral district of Kozani – when she was junior minister and the near shutdown of Athens Paper Mill precisely because both concerns were accumulating losses. With such shortsighted and irresponsible calls, we would be very likely to be led back to the proliferation of problematic enterprises during the PASOK days, which catapulted public debt 40 percent higher. After they were bailed out with taxpayer money, PASOK itself closed them down and unemployment rose. The problem, therefore, is not for the government to keep ailing firms going, but to implement retraining programs for the workers affected by their restructuring.

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