OPINION

The current debt

The seamen’s strike started out as just another bout of Greece’s endless labor action. But the angry and justified reactions of the Cretan farmers who saw themselves cut off from their European markets, and the collapse of the strike after the government placed the strikers under military orders, show that union leaders have got to face the fact that the world has changed for them just as it has for the rest of us. Greek society has transformed rapidly in this era of open borders and open markets. The production of wealth in Western Europe is no longer sufficient to keep citizens at the standard of living to which they had become accustomed in the postwar years. Greece never attained the standards of many other European countries but at least it was better off than it is now, when enormous public debt no longer leaves the government any room to borrow to meet the demands of workers and pensioners. Today Greece has to follow the rules set out in the Maastricht Treaty regarding deficits and debt. The national economy has to function the way a household does: If we have money, we can spend; if we do not have money, we borrow; if we have borrowed too much, we need to stop spending so we can repay our loans. Thanks to the low interest rates and easy borrowing of the past few years, Greeks have borrowed an unprecedented amount in a very short time. Last Thursday (coincidentally the day on which the seamen lifted their strike) Kathimerini reported that about 370,000 loans are overdue, with debtors unable to pay installments for three months or more. Out of a total of about 65 billion euros that has been borrowed, payments on 3 billion are outstanding. More than 110,000 people can’t keep up with their credit card payments. At the same time, the public debt in 2005 ballooned to 215.4 billion euros, or 117.2 percent of GDP. As Deputy Finance Minister Petros Doukas recently noted in Parliament, each four-member Greek family is saddled with a portion of the public debt equal to 78,000 euros. Servicing this debt will cost 27.7 billion euros in 2006, or 60 percent of the state’s revenues. This, as Kathimerini’s Dimitris Papadocostopoulos reported, means that with the remaining 12.9 billion euros of revenues, only two-thirds of wages and pensions can be paid by the state in 2006. In other words, without any other spending, the state will have to keep borrowing to meet its standing obligations on wages and pensions. Furthermore, between 1994 and 2005, Greece paid 280 billion euros to service the public debt. The government is severely constrained in meeting workers’ demands. Higher wages and incomes will have to come from an increase in productivity and through the better management of state funds and social security assets. For this to happen, workers and employers will have to cooperate in order to achieve the golden mean between increasing productivity and making adequate compensation for employees. Such incidents of harmonious and fruitful cooperation are still rare. Businesses, farmers and other producers have to specialize and break into markets which demand what they are supplying – as the Cretan farmers have done. This means, automatically, that a strike based on the old model of conflict with the government and the pursuit of the greatest possible social upheaval as the way to press demands, brings the government (irrespective of the party in power) to an impasse. But, even worse, it jeopardizes other groups of citizens who do not have the luxury of losing time or money, because this would mean the catastrophic loss of customers or deadlines for loan payments. Our society’s dynamics and concerns have changed greatly over the past few years. It is no longer based mainly on public sector employees, subsistence farmers and blue-collar workers. Any disruption can have far-reaching consequences. As the seamen’s strike showed (and which is made clear in a VPRC poll conducted for Kathimerini), citizens may give workers the benefit of the doubt, even if they are not fully aware of what the strikers are demanding. But they would also like to see the strike stop. In other words, we may understand the workers’ need and right to press their demands, but at the same time we cannot tolerate obstacles in our effort to meet our obligations. This, more than any other element of the seamen’s strike, ought to get labor union leaders thinking seriously of how they will adapt their strategy to the new century.