Joining hands

Prompted by the landmark agreement between Hellenic Telecommunications Organization (OTE) and labor unions over the terms for future staff hirings, Prime Minister Costas Karamanlis and opposition leader George Papandreou yesterday both emphasized that the deal should serve as a prologue to a series of necessary structural reforms. The case of OTE reflects many of the conundrums plaguing the Greek economy. Faced with ever-growing competition, OTE’s management realized that the company could not keep pace with market competition unless it got rid of a longstanding and damaging practice: the en masse recruitments of political friends. The entire public sector and a big chunk of the private sector are facing similar problems. The former have come to bow down under the burden of a largely unqualified, surplus staff whose permanent status is protected by law. The latter are restrained by costly bureaucracy and inelastic recruitment legislation, which discourages investment and sacrifices potential jobs in the name of protecting employment. The prime minister yesterday vowed to brave any resistance and push drastic reforms that will help overcome these problems. Such moves will neither compromise the government’s welfare commitments nor intensify the strain on those with lower incomes. It’s one thing to protect the less well-off in society, and quite another to tolerate vested interests that torpedo every government bid for reform. Karamanlis yesterday vowed that reforms, some of which are already under way, will continue. He insisted they will be fair and, when necessary, discussed with all interested parties. The conservative government will do everything to ensure that the country is not left behind in the globalized, competitive economy. For his part, PASOK leader Papandreou acknowledged the need for reform but pointed out that we have to go along the new rules of the global economy. In a clear shift away from old-style PASOK policy, Papandreou was eager to condemn the old, statist economic model. The opposition appears to back the government’s reform drive – or at least avoid being to critical of the reforms. It prefers, of course, that they be carried out by New Democracy. The emerging political consensus justifies hopes that the requisite structural reforms will proceed. The government must seize the opportunity and push through the necessary reforms without delay. Note that these must be implemented by the end of 2005. Greece cannot afford to waste anymore time, as the two-year deadline for fiscal equilibrium imposed by the European Union is not far away.