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Greeks still hostile to structural reforms – Myth or Reality?

To tell you the truth when I read the title of the article below, my brain hit the wall of my own prejudice. “Greeks still hostile to reforms despite economic depression” I read on a German state media outlet and much to my shame I thought: “Oh, it’s the German conservative establishment again, blaming the Greeks for failing reforms, for this and that, and thus a day before the Eurogroup meeting.”

I admit, I was quite wrong. The article describes quite vivid and well-researched the good old way of doing business in Greece. Or even just get a job.

Creditors insist on strucutral reforms to boost economic growth and generate new jobs. But Greeks resit. Why is that?

“Greeks see things differently. They know that structural reforms would shake the foundations of Greek society – because they would break up a vast and complex web of dependencies, cozy deals, agreements, and relationships that order people’s place in the economy and give them some security in an uncertain world. That’s why most Greeks believe that despite the government’s debt crisis, established structures shouldn’t be shaken up.”

A Greek needs to be part of the system

“”Once you’re in, you’re in, and then you can have a good life.” This phrase comes up fairly quickly when one chats with Greeks about the problems in their country. Being “in” means being part of a network characterized by nepotism, favoritism and corrupt dealings, mediated at the center by the Greek state.

To get “in,” one needs good contacts. In Greece, it’s not possible to get a job even as a municipal garbage collection worker without having contacts. Jobs like that aren’t easy to get, and have great advantages – as a sanitation worker, one is classed as a civil servant, and gets paid a secure income in an economically weak and insecure country.”

Doing business with the public sector

The CEO of a municipal agency in a Greek city – who preferred to remain anonymous for this interview – explained how “getting in” works on an everyday basis: “Let’s assume my enterprise needs new plumbing-pipes worth four million euros,” he said. “A private business will get the contract to deliver pipes to me – but will deliver only two million euros’ worth. The other two million will be split between me and my supplier, who will of course provide me with a receipt for four million euros.”

Naturally, such contracts are subject to public bidding processes, just as European Union laws and regulations require. But in most cases, the winning contractor has been decided in advance. That’s how business is normally done in Greece, even now, with the country in a deep economic crisis. 

Salary cuts promote corruption – But that was also the case before the economic crisis

“On a recent Friday, the businessman said, a civil servant arrived at his business location and announced an inspection. There was nothing out-of-order, but the inspector refused to leave after the inspection. He sat for hours in the CEO’s waiting-room, without saying a word. As the hour neared quitting-time, the businessman and his partner discussed between themselves what was to be done with the chap. After all, they wanted to go home to their families for the weekend. Late in the afternoon, they gave him an envelope with a few hundred euros in it, to get rid of him.”

Generation Y is different – Really?

“Generation Y (born 1980 – 1995) is the first generation to question the country’s culture of corruption and nepotism since Greece achieved independence in 1821 from the Turkish Ottoman empire. Many of its members don’t want to accept these ways of doing business that continue to drag the country down.

Generation Y is better educated than any previous generation, but only 10 percent manage to find an adequately paid job. The rest are unemployed, or stumble through life as badly paid freelancers, taking in perhaps 400 or 500 euros a month.”

This new generation refuses to pay bribes, and instead waits until an application to conduct a business or a project has wound its slow way through government agencies, even if it takes longer.

“It works out,” according to entrepreneur Konstantinos Konstantinidis. “Our parents’ generation brought this country to ruin. Now it’s up to us to learn from their mistakes.”

Konstantinidis is proud that he produces something, that his medium-sized business is productive, and doesn’t wait on the next state contract – unlike a great many other companies in Greece.

Many members of Generation Y are self-employed, setting up tiny businesses – perhaps offering dance lessons in a small town in the countryside, or farming olives on their parents’ land. Nearly every Greek family still owns a patch of farmable land.

The new generation, it seems, doesn’t need as much money to live on as their parents did. Their parents’ lifestyle is, in any event, unachievable for most of them.“(full article DeutscheWelle)

A bit cliche – and certainly romantic.

Because if the parents “who ruined the country” had no olives trees, agricultural land, a small apartment here and another there  if they could not afford start capital for their offspring business, things would be much tougher especially for the youngest part of Generation Y.

Certain is that the majority of the Generation Y does not seem to seek a job with the public administration anymore. But as we have no data on this… it is just an assumption. what I can report about from Athens is that still many of my friends dream their kids get a job at a ministry, a public institution or whatever. Jobs, especially good paid jobs are a rarity. Unemployment among youth below 25 is more than 45 percent. Majority of offered jobs is at cafes, bars and restaurants, or big retail chains. Part-time. For 3 euro per hour.

A question to ask is who has been resisting  the reforms? The protests in the first year of the first bailout were largely spontaneous. In recent years they turned into a show place of unions of the narrow and broader public and the private sector of the utility companies. Those who bring up or down governments.

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  1. Yes, it is doubtless true that Greeks are totally opposed to structural reforms that would increase personal accountability and competition between individuals and businesses. In other words, they are opposed to the modernisation that occurred in western Europe about 50 years ago.
    But that is not on offer: the so-called “structural reforms” being demanded (and partially imposed) by the Troika are ideological neoliberal crap. They consist of such dogma as “freeing up markets” — that is, allowing anyone to become a taxi-driver, for example, instead of limiting the number to some sensible figure; as privatisation of public goods — such that transport becomes less reliable and more expensive, while the new owners (politicians’ friends and relatives) suck up the profits; or simply deregulating ownership, allowing multinationals to take control over much of the economy — taking away national control and also promoting regional or even global monopolies to force up prices.
    As usual, not one politician anywhere in Europe or North America shows any interest in addressing the needs of society. The level of corruption across the developed world is now so great, that it rivals the traditional corruption of very poor countries in Asia and Africa. There is little point in complaining about Greece when the entire world is in such a state.

  2. I am speechless
    “despite the governments debt crisis” ..
    a debt that was contrived to ensnare Greece & 27 other nations peoples & trap them in poverty ..
    you can’t see that you have been done over by thieves ?
    that it was a deliberate trap executed upon the people of the EU member nations ..
    by scum on earth – just doing what comes naturally ?

  3. It is like someone bashes you for no reason & then tells you it was your fault & you believe them & that you deserved it.

  4. @R Davis: the UK has a similar debt problem, a similar balance of trade problem to that of Greece… and it is not in the eurozone. Moreover, the UK pays VERY low wages relative to the cost of living (like Greece) and then tries to blame everything on the European Union. You seem to have fallen for the tricks of UKIP and the Tories. The factr is that all of advanced capitalism is in crisis: the Germans have minimised the crisis for themselves and put the burden on the rest of the eurozone. The UK has put the burden on the poor of the UK — which is now most of the working class and quite a bit of the middle class. The only people who have done well out of the structural changes in the last two or three decades are merchant banks and multimillionaires/billionaires. This has nothing to do with nationality and actually very little to do with the eurozone. It is about money and power: the politicians responsible are located primarily in the USA, UK, Switzerland, France and Germany.

  5. Let us not forget what happens to what we call Europe. Well, it does not exist. All there is now is a predatory state called Germany, a set of faithful servant countries allowed to eat some crumbs out of the master’s plate (Finland, Holland, Austria, etc.), a set of scared countries with corrupt elites (France, Spain, Italy etc) and a set of slaves (Greece, Portugal). Germany totally controls the ECB (corruption???), therefore anybody’s liquidity, and, in this way, forces all others to accept its decisions.
    Most advanced among the slave nations is Greece, which practically is managed via locally translated “legislation” written in Berlin and local enforcement agencies (called police).
    To fool the natives when new looting ideas arrive from Berlin, they have invented the name: “Reform”. Of course, any corrupt practices in use in the country before the German rule have been preserved and even extended, as long as they do not interfere with the master plan for bleeding the country dry.

  6. I have worked in far more corrupt economies than Greece and they are doing rather well. Perhaps Greeks should admit that they are just not very good doing corruption and see things differently.

    As, to misquote DeutscheWelle, European Banks do “.. see things differently.”

    Particularly, on paying taxes (from oxfam…….
    “Tax havens account for 26 percent of the profits made by the 20 biggest European banks – an estimated €25 billion – but only 12 percent of banks’ turnover and 7 percent of the banks’ employees.

    Subsidiaries in tax havens are on average twice as lucrative for banks as those elsewhere. For every €100 of activity, banks make €42 of profit in tax havens compared to a global average of €19.

    Bank employees in tax havens appear to be 4 times more productive than the average bank employee – generating an average profit of €171,000 per year compared to just €45,000 a year for an average employee.

    In 2015 European banks posted at least €628 million in profits in tax havens where they employ nobody. For example, the French bank BNP Paribas made €134 million tax-free profit in the Cayman Islands despite having no staff based there.

    Some banks are reporting profits in tax havens while reporting losses elsewhere. For example, Germany’s Deutsche Bank registered low profits or losses in many major markets in 2015 while booking almost €2 billion in profits in tax havens.

    Luxembourg and Ireland are the most favored tax havens, accounting for 29 percent of the profits banks posted in tax havens in 2015. The 20 biggest banks posted €4.9 billion of profits in the tiny tax haven of Luxembourg in 2015 – more than they did in the UK, Sweden and Germany combined.

    Banks often pay little or no tax on the profits they post in tax havens. European banks paid no tax on €383 million of profit they posted in seven tax havens in 2015. In Ireland, European banks paid an effective tax rate of no more than 6 percent – half the statutory rate – with three banks (Barclays, RBS and Crédit Agricole) paying no more than 2 percent.”

    And ”Once you’re in, you’re in, and then you can have a good life.”

    Or as DeutscheWelle says …

    “…. a vast and complex web of dependencies, cozy deals, agreements, and relationships that order people’s place in the economy and give them some security in an uncertain world. That’s why most [European banks] believe that despite the government’s debt crisis, established structures shouldn’t be shaken up.” …and so we have the nth Greek bailout