OPINION

Bankrupt system

If there is one message coming from the political and social tumult caused by the recent spate of bankruptcies and layoffs, it is that our system is too old, too inept, and too heavily based on outdated protectionist models to meet contemporary needs. When a company’s troubles come to a head, our system proves too inflexible. The firm is either billed as problematic, kept alive with ineffectual subsidies, or else declared bankrupt, hence leading the employer and staff to the unemployment office. There is no intermediate mechanism, like the one in the USA, which spares a problematic business from being automatically shut down. A company there first files for protection against creditors and undertakes the obligation to restructure itself by cutting its spending and workforce, and by perhaps selling some of its assets. In other words, the company is given the time and legislative means to wage a coordinated effort to rescue itself by reorganizing its structure and by seeking a buyer or partner. This is a different business logic aiming to rescue business activity, rather than pushing it to surrender without a fight. The situation here is very different. Greece lacks the tools and business culture for pursuing such flexible practices. Such an attempt would be an assault on our rigid labor legislation, which functions on an all-or-nothing basis, as if the rescue of jobs or the promotion of investment were not underpinned by clear economic and business reasoning. The modern economic environment mandates radical reforms and courageous decisions that will transform the economy and introduce new elements into business activity. This is the challenge of the new era. Politicians must act before these problems become insurmountable.