Under the pressure of the present circumstances and that of our partners and lenders and from the parties who are supposedly supporting him, the Prime Minister, Mr. Lucas Papademos has been forced into taking ineffective measures against the private sector and citizens.

By Grigoris Nikolopoulos

This came about due to the following: The political system protecting the public sector, not closing useless public services and state run enterprises and pretending to reduce the size of the reserve which actually costs more than it saves.

The first measures have led to the closure of hundreds of thousands of companies, have rendered hundreds of thousands of young people unemployed, have deepened the recession and have led to cuts in wages.  These factors were followed by a series of heavy taxation measures, examples including the property tax under the threat of one’s electricity being cut off, exceptional contributions and increases in VAT; all exacerbating the crisis and completing the process of draining citizens’ resources.

The third wave of measures is now affecting household incomes under the guise of reducing labour costs in order to increase Greece’s international competiveness. As everyone in Greece knows, no one more so than the entrepreneur or small business, the problem inherent in Greek competitiveness, is not labour costs. It is in fact the costs created by the public sector, bureaucracy and corruption.

To put this into plain words without the use of economic terminology:

A Greek worker does not cost more than his European counterpart. However, other European countries produce more and sell globally. Therefore, our lack of competitiveness cannot be blamed on the actual cost of employees, nor is the performance of a lower standard. Greek private sector employees work just like their counterparts everywhere else. Neither is the currency to blame, as some say devaluation and a return to the drachma would make us more competitive. No, this isn’t the answer. The Italians, Spaniards, French and Germans all have the euro, their costs are in euro, yet they are characteristically export countries.

A key problem in ascertaining labour costs here in Greece through official indicators is difficult and perhaps not as it seems, due to the rampant immigrant employment market. Agricultural production costs are measured in terms of Pakistani workers as Greeks working in the fields simply don’t exist. If you don’t believe me, take a walk through the Marathonas region and if you come across a Greek working there, I will be extremely surprised.

Alternatively, if you’re more in the mood for a walk by the sea, go to a typical fisherman village, to see the supposed “Greek” fishermen. They all hail from Egypt. There is in fact, no such thing as a Greek fisherman, unless he is the owner of the fishing vessel. The same rule applies to industries, cottage industries and ultimately, the supermarket. Let’s not even get into construction, as the Albanian construction workers all but fled the country when this sector slowed down.

So what labour costs are we actually talking about then?

Maybe we should be discussing Greek bank employees? Have Greek banks ever been loss making? Have their executives ever not received huge bonuses or their shareholders dividends? Have you ever met a poor banker? Or have you realised that Greek banks are uncompetitive globally? Is today’s problem based on labour costs? Of course not. The inherent problem in the banking system is the exposure to the Greek government bonds which has destroyed the system. Another factor is the fact that they accepted guidance on funding from the governments. They (banking executives), like the rest of us, have been affected by the plethora of the politicians’ incompetence and corruption in public administration.

That which the Prime Minister, Papademos’ government needs to do is well known to all of us. PUBLIC costs must decrease. The size of the PUBLIC SECTOR, NOT THE PRIVATE SECTOR, must be reduced. The private sector must strengthen and grow if it is to support the economy left by the gap of the shrinking public sector. However, just as the former Prime Minister, George Papandreou dared not attempt to limit the size of the public sector, as party members and therefore bribes would be curtailed, Papademos’ government is attacking the private sector. This isn’t due to Mr. Papademos being unaware of the correct course of action or indeed wanting to achieve it. He is simply not allowed to and fears being overthrown. The Prime Minister however, should not succumb to this. He should do what he feels is just, exposing everyone (despite the threat of being overthrown) with a historic and revealing announcement to the people of Greece.

Do not believe, Prime Minister that the government’s sole function centres on the PSI. Your job, as you presently hold the position of Prime Minister, is to exercise the correct policy, to undo previous wrongs and to prevent anyone – especially those responsible for the political mess Greece is in, from standing in the way of Greece’s salvation.

Let the private sector grow and become competitive and concentrate on the essential work at hand; shrinking the public sector, reducing bureaucracy and fighting corruption in the government.